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.
This is 100% to make it harder for non-paying AI scrapers. Their business is mostly selling data to LLM companies now. This won’t stop non-paying scrapers but now they will have to make accounts and it will be easier to spot and stop.
They are still shooting themselves in the foot by almost completely killing search engine traffic but this is their reasoning behind it. Once again a company killing their future for the quick buck.
this has no effect on the scrapers , thats what spez is saying. you can simply automate account creation easily, plus they intend to keep these accounts long term anyways.
The AI scrapers just make new user accounts anytime they need one. Requiring login barely even slows them down.