Reddit’s Google traffic leak hit $RDDT like a rug pull—AI ate the clicks

Reddit shares plunged 30.44% to $90.15 on Friday, extending a 29% decline to $91.73 and wiping out more than $7 billion in value as Google’s AI-powered search products intensified pressure on the platform’s advertising-supported business. The drop followed strong Q3’26 results and a weaker-than-expected current-quarter revenue forecast, with CEO Steve Huffman warning that Reddit could lose a low double-digit percentage of its daily users in Q4. The stock decline also came as Alphabet, Google’s owner, lost about $500 billion in Thursday’s post-earnings selloff after search growth slowed to 12%.

Third-quarter revenue climbed 53% year over year to $895 million, above the $878.4 million estimate, while advertising revenue rose 54% to $847 million. Net income reached $283 million, adjusted EBITDA was $402 million—up 70% and above the $399 million estimate—and diluted earnings per share rose 75% to $1.40. Published earnings estimates cited diluted EPS of $1.33 and $1.35, meaning Reddit exceeded both benchmarks.

User growth trailed forecasts. Reddit reported 130.3 million daily active unique visitors, up 12% year over year but below estimates of 133.4 million and roughly 134 million, while weekly active unique visitors reached 515.2 million, up 16% but below the 531.1 million estimate. U.S. daily visitors fell 2% to 50.7 million. Huffman said searches sent Reddit more than one million fewer visits per week during October, potentially removing at least 13 million people per day if daily users decline by a low double-digit percentage in Q4 from the current base of around 130 million.

Huffman described Google as an increasingly active content crawler while warning that its AI features reduce outbound clicks. “Google is crawling us as hard as ever,” he said on October 29, 2026. “The reality is the AI Mode does not drive traffic,” he added, and separately told investors: “The AI mode does not drive traffic, not for us and not to anybody as far as I know.” Google’s AI Overviews and AI Mode can surface answers and summaries directly in search results, reducing referrals to Reddit and other websites while also limiting the platform’s ability to acquire and re-engage users.

The warning extended beyond Reddit. People Inc. (PPLI), publisher of People magazine, reported a 40% year-over-year decline in Google search traffic, according to Digiday. Tripadvisor (TRIP) CEO Matt Goldberg attributed fewer drive-by visitors to AI Overviews, per Skift, while Pinterest (PINS) warned that its search traffic remains outside its control, according to Barron's; Pinterest shares fell nearly 8% Friday after an earnings miss. Homework-help company Chegg (CHGG), whose shares declined from $113 in 2021 to about $1, has sued Google over AI summaries.

Reddit is also used as a source by AI systems. Bull Theory said AI providers pull about 40% of their answers from Reddit threads, while Google and OpenAI reportedly pay about $60 million and $70 million a year to license Reddit content as Google’s licensing deal nears expiry. Chief Operating Officer Jen Wong said more than 80% of Reddit’s revenue comes from logged-in and app users. Even after the selloff, Reddit traded at 19 times expected earnings, compared with 7.5 for Snap, according to Reuters data.