Reddit reported strong quarterly financial growth, but investors reacted sharply to a warning that changes in Google’s search experience are reducing traffic referrals to the platform.

The company generated $895 million in third-quarter revenue, representing 53% annual growth. Net income increased to $283 million, while daily active unique visitors reached 130.3 million.

Despite these results, Reddit shares plunged approximately 29% on October 30, marking their largest single-day decline after the company warned that its user growth could weaken if AI-powered search continues reducing referral traffic.

The development has implications well beyond Reddit. It raises questions about the financial future of publishers, forums, educational websites, and other companies that depend on search engines to attract visitors.

By the numbers

Investor perspective: What it means for value and risk

Reddit’s financial performance was strong, but its forward guidance created uncertainty.

The company forecast fourth-quarter revenue between $1 billion and $1.03 billion, below the approximately $1.05 billion analysts had anticipated.

Management also disclosed that Google search referrals had declined meaningfully during the third quarter. During October, the company observed an average loss of more than one million search referrals per week.

If the trend continued, management warned that daily active users could potentially fall by a low double-digit percentage in the fourth quarter.

Several analysts subsequently reduced their expectations. KeyBanc Capital Markets analyst Justin Patterson downgraded the stock, while analysts at Guggenheim, Cantor Fitzgerald, and JPMorgan reduced their price targets.

However, there is a meaningful bullish argument.

Reddit’s logged-in and app-based users grew sequentially. Management says these more engaged audiences account for more than 80% of the platform’s monetization.

This suggests Reddit may be able to reduce its dependence on external search engines by turning occasional visitors into regular platform users.

Customer perspective: What it means for users and advertisers

Reddit users may not notice an immediate change to the platform, but the way people discover its communities could change.

Google’s AI-generated search answers can provide information directly within search results, potentially eliminating the need for users to visit the original discussion or website.

For Reddit, fewer referral visits could eventually affect advertising inventory and the number of new users joining communities.

Advertisers should pay attention to more than total user numbers. They should monitor engagement, logged-in activity, referral sources, and actual campaign performance.

For regular users, accessing communities directly through the Reddit app or website reduces dependence on external search referrals.

Employee perspective: What it means for workers

Reddit reported 2,555 employees at the end of 2025, according to its annual SEC filing.

The third-quarter announcement did not identify a new workforce-reduction program associated with the search traffic problem.

The company’s response emphasizes investment in machine learning, recommendations, personalization, and app performance. Those priorities are particularly important for its product, engineering, and advertising teams.

There are no sufficiently verified direct employee accounts in the materials reviewed to establish whether the changing search environment has affected internal morale or staffing.

The synthesis: Who wins and who bears the cost?

This story highlights a major shift in the economics of the internet.

For years, businesses have invested in search engine optimization, content creation, and websites to attract visitors through Google.

AI-powered search is changing that relationship by allowing users to receive answers without necessarily visiting the source.

Google can potentially deliver a more convenient search experience, while websites that depend on referral traffic face a new financial challenge.

Reddit’s long-term value will increasingly depend on whether it can establish itself as a destination rather than simply a source of information discovered through another platform.

What to watch next: Reddit’s fourth-quarter active-user figures, search referral trends, advertising revenue, and the percentage of users accessing the platform directly.

Primary sources: Reddit Q3 earnings release · Reddit SEC shareholder letter · Reuters market coverage