Reddit's Plunge
Reddit (NYSE: RDDT) reported its Q3 results after the US market closed on October 29, 2026. Then on October 30, the stock plunged to $91.73. That's 29.22% lower than the day before.
✦ Reddit (RDDT) Stock After Earnings: A One-Day Plunge
Oct 8 - Oct 30, 2026, regular-session closes (US Eastern time), USD
It slid as far as $89.28 intraday, setting a new 52-week low, and volume jumped to about 33.5 million shares.
The stock had already fallen about 18% in after-hours trading right after the report, and the next day's regular session saw a flood of sell orders too. It was the biggest one-day drop since the IPO.
Looking only at Reddit's Q3 report card, the plunge is hard to understand. Revenue rose 53%, net income rose 74%, and ad revenue grew 54%. But what investors zeroed in on wasn't last quarter's results.
It was the warning that visitors coming to Reddit from Google Search are dropping fast.
Record Results, but US Users Fell
Reddit's Q3 revenue was $895 million and net income was $283 million. Diluted EPS came in at $1.40, and adjusted EBITDA of $402 million made up about 45% of revenue. Ad revenue rose 54% to $847 million, and gross margin hit 91.5%.
Both revenue and EPS came in above market expectations.
✦ Q3 User Metrics
Daily active uniques (DAUq), year over year
But the user numbers tell a slightly different story. Global daily active uniques (DAUq) came in at 130.3 million, up 12% from a year earlier but flat with Q2. US DAUq fell 2% to 50.7 million, and international users grew 24% to 79.6 million.
International markets carried the overall growth while US users actually shrank. You might be thinking, a 2% dip, what's all the fuss? But it was the first time US DAUq fell year over year since Reddit went public in 2024.
The gap is even clearer by login status. US logged-in DAUq grew 1%, but logged-out DAUq fell 4%. That's an important change, because logged-out and web users are where the drop in search traffic hit hardest.
Better ad prices and impressions drove revenue up a lot. But Reddit hasn't convinced investors it can keep bringing in new users from here.
Google's AI Search Is Shaking Up Reddit's Traffic
CEO Steve Huffman said that over the course of October, visits from search engines to Reddit dropped by more than 1 million a week on average. The decline in search traffic picked up in late Q3 and carried into early Q4.
✦ What Huffman Pointed To
Google's AI answers and clicks to Reddit
The problem Huffman pointed to is Google's AI Overviews and AI Mode. It used to be that you'd type a question into search, click a Reddit thread, and read real users' experiences.
Now Google shows an AI summary and answer at the very top of the results first, right?
It's a setup where, once users get their answer right there, they have less reason to click a Reddit link. Huffman said Google keeps crawling Reddit and search demand is still there, but AI search isn't turning into actual visits.
He added that overseas, weaker search visibility for Reddit pages with poor-quality machine translations also played a role.
His outlook is even heavier. He said that if search traffic keeps declining at the current pace, Q4 DAUq could keep falling from about 130 million today.
It was a warning that the drop in search traffic isn't a temporary wobble in traffic, and that it could eat away at the user base itself.
Competing With Google While Selling It Data
Reddit's ad revenue makes up about 95% of its total revenue. The 54% jump in Q3 ad revenue came from higher ad prices and more impressions together.
Global ARPU (average revenue per user) also jumped 36% to $6.87, and US ARPU grew 53% to $13.82. It means Reddit is getting better at selling ads to the same number of users.
✦ Google: Rival and Customer
Two roles at the same time
Another important business is content licensing. Reddit has deals to provide its posts to Google Gemini and OpenAI. In search, Google's AI is a competitor cutting clicks to Reddit, but it's also a customer buying Reddit's data.
Q3 other revenue grew 35% to $48 million, and that includes content licensing.
The existing deals with Google and OpenAI are nearing the end of their current terms. In the earnings call Q&A, Huffman said Reddit is negotiating with Google and OpenAI, and that the terms have to be economically and strategically fair to Reddit.
He left the door open to not signing new deals if the terms don't fit. For Reddit, winning back search traffic matters, but so does keeping the revenue from supplying data to AI companies on favorable terms.
Reddit's Strategy Shift
✦ Reddit's Login Bet
What the experiment could win and lose
In Q4, Reddit plans to run an experiment in some markets outside the US that requires logging in to see most content. Logged-in and app users account for more than 80% of Reddit's monetization, and their usage grew from the previous quarter in Q3 too.
Reddit looks to shift its weight toward people who open the app and come back every day, rather than people who visit once from search results.
The catch is that login can be a barrier for someone who just arrived from search. No surprise there. Take Meta's social media (Facebook, Instagram, Threads and so on): look at a few posts and they force you to log in, right?
So when I'm searching and land on Meta's social media and get forced to log in, I just leave. I bet plenty of people do the same, and Reddit will have to live with this problem going forward.
If Reddit can turn search visitors into logged-in users, it can improve ad precision and repeat visits, but if more people drop off at the first visit, bringing in new users gets harder.
This experiment will be an important test of whether Reddit can cut its reliance on search and build loyalty to its own platform.
✦ Side Note
Just my personal take
Q4 revenue guidance weighed on the stock too. The company guided to revenue of $1.00 billion to $1.03 billion, with a midpoint of $1.015 billion. That's 3% below the market expectation of about $1.046 billion.
Q3 revenue beat expectations, but worries grew that slower user inflow could hold back revenue growth in Q4 as well.
Wall Street Cuts Its Price Targets
Several brokerages cut their Reddit price targets the day after earnings.
✦ Reddit Price Target Cuts
Oct 30, 2026
| Brokerage | Before | After | Rating |
|---|---|---|---|
| Bank of America | $190 | $135 | Neutral |
| Goldman Sachs | $215 | $140 | Neutral |
| JPMorgan | $185 | $150 | Neutral |
| Wells Fargo | $142 | $110 | Equal Weight |
| Needham | $300 | $150 | Buy |
| Citi | $245 | $186 | Buy |
| B. Riley Securities | $270 | $190 | Buy |
| Cantor Fitzgerald | $170 | $120 | Neutral |
According to StockAnalysis, which aggregates S&P Global data, the average price target from 34 analysts was $194.08, with a median of $185. The low was $110, the high was $300, and the overall rating was Buy.
Some firms slashed their targets on the very day the stock crashed (these people always do this...), but a few kept their Buy ratings. Wall Street is split on how much the structural change in search traffic will hurt Reddit's long-term growth.
Reddit has succeeded in raising ad prices and making more revenue from its existing users. But as long as users depend on Google Search to discover Reddit, the fight against AI search is bound to be an uphill one.
Google keeps strengthening its AI search, and if Reddit keeps depending on Google Search... well, that's a dead end, right? Can Reddit actually find an answer?
This isn't investment advice. You know that, right? Let's each protect our own hard-earned money.
That's all for this post. See you next time.
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🌐 Korean version: 레딧(RDDT) 주가가 하루 만에 29% 폭락! 무슨 일이 생겼길래 이렇게까지?
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