Why Reddit shares are falling today

What happened?

Shares of online community and discussion platform Reddit (NYSE:RDDT) fell 5.8% in the afternoon session after Business Insider reported, citing analytics firm Similarweb, that the company suffered a 13% decrease in global visits from October 2025 to October 2026 as Google AI Overviews reduced referral traffic.

According to the report, the reduction in referral traffic from Google AI Overviews contributed to the decline in website visits over the twelve-month period. The drop in traffic occurred even as the company recorded growth in another audience measure. The company reported a 16% yearly increase in weekly active uniques for October.

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What is the market telling us

Reddit’s shares have had 59 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 13 days ago when the stock dropped 25.2% on the news that the company reported third-quarter 2026 financial results and issued fourth-quarter guidance that fell below Wall Street’s estimates. According to a company press release, Reddit reported third-quarter 2026 revenue of $895 million, up 53% year on year, and diluted earnings per share of $1.40. Both figures exceeded Wall Street expectations, topping consensus analyst estimates of $877.2 million in revenue and $1.33 in earnings per share. However, forward-looking guidance dampened investor sentiment. Reddit projected fourth-quarter 2026 revenue between $1 billion and $1.03 billion and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) between $480 million and $510 million. At the midpoints of $1.02 billion and $495 million, respectively, both revenue and adjusted EBITDA guidance missed consensus estimates of $1.04 billion and $509.4 million.

In addition, domestic daily active visitors fell by 900,000 year on year to 50.7 million, raising concerns over domestic user traction. On the earnings call, CEO Steve Huffman attributed user softness to search referral traffic dropping by over 1 million weekly visits in October as Google expands AI Overviews, warning that fourth-quarter daily active uniques could drop by a low-double-digit percentage. Huffman noted that logged-in and mobile app users generate over 80% of monetization, prompting tests to shift toward a logged-in-only platform.

Reddit is down 58.8% since the beginning of the year, and at $99.65 per share, it is trading 61.5% below its 52-week high of $258.93 from January 2026. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $1,976.

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