Reddit stock fell 29% to $91.45, according to TradingView data, after the company told investors that search referrals were falling sharply. The shares are on course for their worst single-day decline since the March 2024 listing.
The drop came one day after third quarter results that beat Wall Street on both revenue and earnings.
Revenue reached $894.96 million, up 53%, against the $874.9 million analysts expected. Diluted earnings came in at $1.40 a share against $1.33 (Reddit, October 29, 2026).
Search referrals fell by more than 1 million a week
Huffman put a number on the shortfall. Search traffic dropped by more than 1 million referrals on average per week during October, he told analysts.
He named Google’s AI Overviews and AI Mode as the likely cause, while calling that his hypothesis rather than a confirmed finding.
He also pointed to a second factor. Machine-translated content has been ranking lower, which he said mainly affects markets outside the United States. Reddit does not have full visibility into the algorithm changes behind either effect.
What moved Reddit stock was not the quarter. It was what co-founder and chief executive Steven Huffman said about where the audience comes from.
Our search referral traffic was down meaningfully in Q3 with the decline accelerating later in the quarter. — Steven Huffman, co-founder and chief executive, Reddit, on the third quarter earnings call
The forecast, not the quarter, repriced Reddit stock
Guidance is where the beat unraveled. Reddit guided fourth quarter revenue to between $1.00 billion and $1.03 billion. Analysts had modeled $1.05 billion (Reddit, October 29, 2026).
The midpoint sits $35 million below consensus. Set against a $20.1 million beat on the quarter, the market read the pair as a downgrade.
Reddit warned its user base could shrink
The sharper disclosure concerned users rather than revenue. Daily active uniques averaged 130.3 million across the quarter, up 12%, and weekly active uniques averaged 515.2 million, up 16%.
Huffman then told analysts that current trends would suggest total daily uniques could fall in the fourth quarter by a low double-digit percentage.
He framed this as a scenario conditional on the October rate persisting, not as formal guidance. A platform that has compounded its audience since listing was describing the conditions under which that audience contracts.
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Huffman said AI Mode does not drive traffic
The chief executive went further than his own company’s numbers.
The reality is the AI Mode does not drive traffic, not for us and not to anybody as far as I know. — Steven Huffman, co-founder and chief executive, Reddit, on the third quarter earnings call
He described the shift in blunt terms, saying Google has really shifted in their relationship with the rest of the internet.
That claim extends past Reddit stock to any business built on search sending it visitors at no cost.
Reddit will test a logged-in-only platform
Reddit’s answer is to close the open door. The company will test a logged-in-only experience in selected markets outside the United States starting in the fourth quarter.
The stated aims are better ad targeting, higher engagement and tighter control over access to its data corpus.
Huffman tied the change to extraction, saying the vast majority of the scraping and stealing of Reddit happens in its logged-out user base. He added that while it is a test, the company intends to make the transition.
Login walls are becoming the defensive asset
Gated first-party data is turning into the industry’s hedge against free traffic disappearing. The same logic is visible in how MTN is turning SME Wi-Fi logins into a marketing engine.
For Reddit stock, the trade-off is explicit. The company is willing to sacrifice some reach in exchange for higher engagement, better advertising signals and tighter control over its data corpus.
Needham halved its target as Wall Street cut forecasts
The sell side repriced the shares within hours.
Needham halved its target to $150. Goldman Sachs moved to $140 from $215, and Wedbush to $150 from $221. Oppenheimer and KeyBanc both downgraded the stock outright.
Those nine are a selection rather than the full tally. JPMorgan, Bernstein, Piper Sandler, Deutsche Bank and B. Riley also trimmed their targets.
DAU issues got worse during the quarter by a wider margin than expected. — Yigal Arounian, analyst, Wedbush, as reported by TipRank
Brokers cut their Reddit stock targets but kept their Buy ratings
Most Reddit stock cuts kept a positive rating. Citi, Guggenheim, Needham and Wedbush all stayed at Buy while slashing the number attached to it.
That split leaves Reddit stock with an unusual profile. The consensus rating stands at Moderate Buy, built from 13 Buys, 12 Holds and one Sell, with an average target of $176.78 (TipRanks, October 30, 2026).
Technical indicators read Strong sell against an aggregate analyst rating of Buy (TradingView, October 30, 2026). At that price Reddit stock carries a market value of $17.59 billion, roughly $7 billion below where it stood before the session.
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A wider repricing of AI winners and losers
Reddit stock fell into a market already questioning what AI spending returns. The S&P 500 dropped 1.33% in morning trading as Intel fell almost 29%.
Amazon slid on capital expenditure of $77.26 billion for the quarter against $35.1 billion a year earlier (Amazon, October 29, 2026).
The message from investors is becoming clearer: strong AI demand is no longer enough on its own. — Daniela Hathorn, senior market analyst, Capital.com, quoted by TheStreet
The same doubt has been building in credit, as AI data center debt splits while US bond sales near a record.
What to watch next
Two tests matter for the Reddit stock. The first is whether the logged-in trial holds engagement once the open entrance closes. The second is whether the referral decline stabilizes or keeps accelerating.
Reddit stock has lost 60.62% in 2026. Reddit has not announced a date for its fourth-quarter results, which outside calendars estimate for February 2027.
