RDDT plunged 29% in a day even though its revenue rose 53% — and the cause wasn’t last quarter, but traffic from Google.
The facts: Reddit closed Friday, Oct. 30, at $91.73, down 29.2% from $129.60 the day before — its worst day since its March 2024 IPO (TheStreet and CoinCentral, Oct. 30–31; Reuters via the same coverage). Its third quarter was actually strong: revenue of $895 million, up 53% year over year, net income of $283 million, and EPS of $1.40, above expectations of $1.33. What punished the stock was the outlook: Q4 revenue guidance of $1.0–$1.03 billion, below the $1.045 billion consensus. U.S. daily users fell 2% year over year to 50.7 million, referrals from search engines dropped by more than 1 million per week during October, and management warned that global daily users could decline by a percentage in the low double digits in Q4 if this trend continues — CEO Steve Huffman blamed Google’s AI features, AI Overviews and AI Mode.
Market context: The S&P 500 fell 1.82% to 7,580.07 and the Nasdaq fell 2.86% to 25,437 on the same Friday — so SPY and QQQ were both in the red. But RDDT fell much further than the indexes: this is a company-specific story, not just a case of following the market.
What I’m watching next: whether U.S. logged-in users hold steady, whether referrals improve or keep shrinking at the start of Q4, and the Q4 report early next year, which will show whether the $1.0–$1.03 billion guidance was met.
My take: the market is punishing the traffic trajectory here, not today’s ad business — revenue is still growing 53%. But if users coming from search keep dwindling, that ad growth will eventually be at risk too. What could turn this story around isn’t another good quarter, but proof that Reddit can attract users without relying on Google.
This is my analysis, not financial advice — always DYOR.
What do you think: is this an overreaction to one traffic risk, or the beginning of a bigger problem for Reddit?
#SahamUSA #Reddit #Earnings