On Thursday 29 October 2026, after the close, Reddit reported the best quarter in its history by almost every financial measure. Revenue was $895.0 million, up 53% from a year earlier. Adjusted EBITDA was $402.3 million, a 44.9% margin. Net income was $283.3 million and free cash flow $362.6 million. Both revenue and adjusted EBITDA came in above the guidance Reddit had given in July. On Friday 30 October the stock closed at $91.73, down 29.22% from $129.60. On my own daily series since the March 2024 listing, that is the worst single day the stock has had, beating the 20.98% fall of 31 July 2026, which followed the previous print. Reddit has now lost 66.1% from its record close of $270.71 on 18 September 2025 and 60.1% since the end of 2025. The last time it closed lower was 8 April 2025. Reuters attributed the fall to Reddit’s warning that Google’s AI-powered search is cutting referral traffic and could shrink its user base. That warning came from the CEO himself. On the call, Steve Huffman said: “Our search referral traffic was down meaningfully in Q3, with the decline accelerating later in the quarter.” He added that in October “search traffic has dropped by more than 1 million referrals on average per week”, and that if the trend held, total daily users could fall in the fourth quarter by a “low double-digit percentage” from the current base of 130 million. Asked what changed, he was blunt: “The biggest one is the AI Overviews or AI Mode.” And “The reality is the AI Mode does not drive traffic.” So this piece starts from the question the market answered on Friday 30 October. Reddit’s growth has two engines that both depend on other companies. The first is logged-out traffic from Google search. The second is licensing its archive of human conversation to AI labs, Google and OpenAI among them. Is Reddit a durable platform with content nobody else has, or a business whose traffic and pricing power are set by Google’s algorithm and Google’s AI answers? My answer, worked through below: Google sets Reddit’s user count, and it may well set the 2027 user count lower than most forecasts made before 29 October assumed. It does not, on the evidence Reddit itself has given, set much of Reddit’s revenue. The data-licensing engine is smaller than its headlines and its contracted revenue runs out at the end of 2027. The price at the 30 October close assumes something close to a permanent impairment of both. The numbers say that is too pessimistic for the business as it is today, and about right if the logged-in core starts to shrink too. Read on: https://cycledesk.substack.com/p/reddit-rddt-google-can-take-the-visitors?r=7unzzg&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true
142 views
0 Comments
No comments available.
Join the conversation with 500,000+ other investors 💸
Create an account to get access to everything Blossom has to offer!
📊 Personalized algorithm based on your investing style, experience level and interests
📈 Powerful portfolio and dividend tracking tools
👀 See what top creators and others in the community are investing in
