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.
You forgot banning your userbase left and right.
which funny enough made them lurkers.
Yep they hand out auto suspends and bans like it’s free candy.
I once got permabanned for harassment because I called a dude a dumbass in 2 different threads on a very small <1k daily users subreddit and they said I was “following him” and making “personal attacks”
Oh yes, I know of that very well. The admins have crazy trigger fingers.
Also, the experience of new users is just utter garbage. When I finally successfully sidestepped their detection of ban evasion (clear cookies + random user agent + VPN), I noticed how terrible the new-user experience is. I am supposed to gain karma to post anything, but I can’t get karma, because my account is too new and every post and comment is hidden or automatically removed. ??? BUT THE ACTUAL BOTS ARE JUST GIVING EACHOTHER KARMA! This bot prevention bullshit hurts only humans. Utter garbage website, it’s doomed, but I wish it’d die faster.
i created an acc after 1+years of ashadowbanned, i only occasionaly go on niche subs, then after a while i use powersuite to nuke the comments.
And canning my girl Victoria
And the reddit gifts guy.