Oct 30 (Reuters) - Reddit shares tumbled 29% on Friday, marking their biggest single-day drop and hitting their lowest level in over a year, after the company warned that Google’s AI-powered search was hurting referral traffic and could shrink its user base.
The online discussion platform still appears in Google search results but is attracting fewer clicks, as users increasingly rely on the tech giant’s AI tools for direct answers.
“When more than a million search referrals a week disappear because Google’s AI answers the question itself, investors are no longer looking just at the next three or four months, but at how much of Reddit’s audience it will really own in the years ahead,” said Vitor Madeira, senior market specialist at Capital.com.
Reddit warned that its daily active unique visitors could fall by a low double-digit percentage in the fourth quarter if referral traffic kept declining.
If current losses hold, Reddit is set to lose more than $7 billion in market value and Pinterest about $900 million. The two stocks have fallen about 44% and 23%, respectively, this year through their last close.
Reddit has a 12-month forward price-to-earnings ratio of 19.03, compared with Snap’s 7.53 and Pinterest’s 8.48, according to LSEG data.
Separately, Reddit on Friday said it has extended its cloud services agreement with Google through 2029, committing to spend $580 million over three years.
At least 11 brokerages cut their price targets on Reddit, and at least 13 did so on Pinterest.
old.reddit, a clear example of don’t fix what ain’t broken
It’s still not great on mobile.
They’re appealing to a different generation users. New reddit users think old reddit is ancient outdated design. They like the new design because it’s oriented to the internet generation that uses mobile UIs.
its for the tiktok generation. this actually goes way back, when they were doing doomscrolling on another platform i was in before it was permanently shuttled.
I hate it on browser too and is why I use redlib. So much wasted space with side padding filled with useless stuff on an already small screen.
Reddit pre-IPO*
Do people on lemmy have memory loss? This isnt the first time someone claimed something old is actually new
People have been saying that the reddit app is unusable when the API pricing was announced
it’s always been total garbage, especially compared to the third party apps. some of them supported some native reddit features better than the official app.
Your mom called and she wants to know where you are.
All I get is a page telling me to login
Yeah old Reddit was locked up a few months ago. They don’t want people scraping and most new users use the ‘new’ interface.
You mean they used that as an excuse. The reality was probably that it was harder to monetize people using old reddit.
thats what they said, but it doesnt take much to make an account and scrape with that.