Reddit shares drop roughly 30% on Friday after the company warns that Google’s expanding AI-powered search features are shrinking referral traffic and could weigh on user growth. Multiple outlets tie the move to comments from Reddit CEO Steve Huffman saying search-referral traffic from Google fell “down meaningfully” in the most recent quarter.
The selloff also reflects weaker business expectations. CNBC and others report Reddit gives a cautious outlook for the quarter ahead, with guidance described as below analysts’ expectations, and investors reacting to the combination of traffic pressure and concerns about growth and monetisation. Several reports note Reddit is also testing a requirement for users to log in to view content.
While outlets largely agree on the core drivers—Google AI Overviews/AI search reducing referrals and Reddit’s weaker guidance—coverage differs on emphasis. Some focus primarily on the traffic shift and user-growth risk, while others foreground the stock move “worst day ever” framing and the login-test announcement. One report adds details about subscription-like reach impacts and the potential for user metrics to decline if referral weakness continues.
