Reddit lost 29% of its value in a day. Google stopped sending it traffic, and the whole internet has the same problem
Revenue rose 53%, profits 70, and yet it was the worst day in the company’s history. Reddit paid the price for Google answering queries itself and sending almost nobody to websites anymore. Industry-wide figures show this isn’t just one company’s problem.
Key points
Reddit had the worst day in its history, despite revenue rising 53%.
Google’s AI search is costing it more than a million visitors a week.
News websites lost 40% of their Google traffic in a year, and chatbots have replaced almost none of it.
On Friday, October 30, Reddit shares $RDDT plunged 29.2% to $91.73. Nearly $8 billion in market value vanished in a single day, from Thursday’s $129.60, and the share price is down roughly 60% since the start of the year. For a company that was still among the fastest-growing tech stocks on the market this summer, it’s a hard landing.
The strange thing is that the results themselves were excellent. The market wasn’t punishing the numbers from the past quarter. It was punishing a statement Reddit’s CEO made out loud: Google has changed its relationship with the rest of the internet.
A record quarter that nobody cared about
In its third-quarter results, Reddit reported revenue of $895 million, up 53% year over year, beating analysts’ expectations and the upper end of its own guidance. Net income of $283 million translates to a 32% margin, while earnings per share of $1.40 rose 75%. The company has $3 billion in cash and no debt.
Metric | Q3 2026 | Year-over-year change |
|---|---|---|
Revenue | $895 million | +53% |
Net income | $283 million | +74% |
Total daily active users (DAUq) | 130.3 million | +12% |
Daily users in the U.S. | 50.7 million | -2% |
Logged-out users in the U.S. | 27.3 million | -4% |
The problem is in the last two rows. The number of daily users in the U.S. fell for the first time since the company went public in 2024. And the biggest drop was among logged-out users: people who came to Reddit from a search engine, read one thread, and left. For years, this group was Reddit’s biggest source of new visitors. And now, that very source is drying up.
On top of that, the company gave fourth-quarter guidance of $1.0 billion to $1.03 billion in revenue, below analysts’ consensus. Together, that was enough to make it the worst day in the stock’s history.
A million visitors a week who never show up
Reddit co-founder and CEO Steve Huffman didn’t beat around the bush on the conference call with analysts. Search traffic fell significantly during the third quarter, the decline accelerated toward the end of the quarter, and in October Reddit was losing more than a million search visits a week on average. If the trend holds, total daily users could fall by a low double-digit percentage in the fourth quarter.
Huffman named two Google features as the main cause: AI Overviews, AI-generated summaries above the traditional results, and AI Mode, a conversational search mode. Both answer queries directly on Google’s page, often using Reddit content, but users no longer have a reason to click through.
“People still want Reddit. Google just isn’t sending them there like it used to.”
Steve Huffman, Reddit co-founder and CEO, on the Q3 2026 earnings call
Huffman added a detail that sums up the whole situation: Google crawls and indexes Reddit just as intensively as ever, and the word “reddit” remains one of the most searched terms in the world. Demand hasn’t disappeared. Only the click-through has.
Google drained its own pond
The most interesting part of the story didn’t happen in San Francisco, but a day earlier in Mountain View. Alphabet $GOOGL reported its third-quarter results, and its shares lost 12.6% the next day, or about $480 billion in market value.
Alphabet’s total revenue grew 25% to $127.6 billion, and its cloud division doubled year over year. But search revenue, the company’s core business, grew just 12% to $63.4 billion, compared with 17% the previous quarter. And this was while company chief Sundar Pichai said the number of search queries was growing at its fastest pace in five years.
More queries, slower revenue growth. Google’s chief business officer explained why on the call with analysts.
“Strong query growth in AI Mode had an impact, because we see lower monetization in AI Mode.”
Philipp Schindler, Google’s chief business officer, on Alphabet’s Q3 2026 earnings call
That’s the paradox in all its starkness. Google is pushing users toward a mode that currently earns it less than traditional search, while sending almost no traffic from it to websites. So right now, Google and the websites its AI draws on are both paying the price for its new AI search. Meanwhile, the company spent $51.4 billion on data centers and chips in a single quarter, more than its operations brought in, and ended its second consecutive quarter with negative free cash flow.
When a search engine stops being a gateway
Independent data show this isn’t just one company making excuses. A Pew Research Center study tracked the real-world behavior of 900 Americans across nearly 69,000 searches. When an AI summary appeared on the page, users clicked a regular result in only 8% of cases. Without a summary, that figure was 15%. Just 1% of people clicked a link inside the AI summary itself. Ironically, Reddit, along with Wikipedia and YouTube, is one of the three sources most often cited in these very summaries.
Analytics firm Chartbeat, which measures traffic for thousands of news websites, calculated in its report this year that Google search traffic fell 40.2% between July 2025 and July 2026. The year before, the decline was 21.9%, so it nearly doubled. Google’s share of total media traffic shrank from 9% to 5% in two years.
And if anyone hoped that chatbots like ChatGPT or Gemini would replace the lost clicks, the data say a clear no. All AI tools combined send 0.01% of traffic to websites.
“The reality is that AI Mode doesn’t bring traffic. Not to us, and as far as I know, not to anyone.”
Steve Huffman, Reddit co-founder and CEO, on the Q3 2026 earnings call
For twenty years, the internet ran on a simple deal. Websites let Google read their content, and Google sent them readers, whom they could then monetize with advertising or subscriptions. That deal is now falling apart because Google has started keeping the answers to itself.
Reddit is closing its doors. Deliberately
What can be done? Huffman repeatedly said on the call that Reddit can’t control Google, only itself. So the company is taking a step that would have looked like suicide just a year ago: making most of its content available only to logged-in users. The test will begin in the fourth quarter in selected markets outside the U.S., and the change will then roll out globally.
The logic is twofold. Logged-out users coming from search engines are disappearing anyway, so why fight for them? And at the same time, according to Huffman, it’s precisely logged-out bots that are responsible for the vast majority of Reddit content being copied to train AI. Closing the doors means trading reach for engagement, as he admitted. A logged-in app user is far more valuable to advertisers than an anonymous reader of a single thread, and this group grew quarter over quarter both in the U.S. and worldwide.
Whether that’s enough to stop the decline won’t be clear until the fourth-quarter results. For now, investors have taken note of just one thing: Reddit was the first major website to admit on the stock market that Google is no longer a friend. It’s unlikely to be the last.
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