Reddit Stock Fell 36% in a Week. Google Traffic Broke, Not the Business.

By Chris James

Update, November 3: Reddit closed Monday, November 2, at $90.97, down 0.8% from Friday. The figures below are as of the October 30 close.

Reddit (NYSE: RDDT), the site where people ask questions and other people answer them in topic forums called subreddits, closed Friday, October 30, at $91.73. It was down 36.4% for the week, the biggest drop among the 499 S&P 500 and NASDAQ 100 stocks I screen, on about 3 times its normal trading volume. About $10.1 billion of market value went in five sessions.

Most of it came in one day. Reddit reported third-quarter results after the close on Thursday, October 29, and the stock fell 29.2% on Friday, from $129.60 to $91.73, on 33.3 million shares, about 6 times its 50-day average. CNBC called it the worst day since the March 2024 IPO. The previous worst was July 31 of this year, down 21%. It is the lowest close since April 2025 and 66% below the record close of $270.71 on September 18, 2025. It is still 2.7 times the $34 IPO price.

What happened

The quarter itself beat. Revenue was $895 million against $878 million expected, and earnings were $1.40 a share against $1.35, per LSEG estimates quoted by CNBC. What sank the stock was everything after the quarter:

• Weak Q4 guidance. Reddit guided fourth-quarter revenue to $1.00 billion to $1.03 billion. Analysts expected $1.05 billion.
• Users missed. Daily active uniques (DAUq) were 130.3 million against 133.7 million expected. In the U.S. they fell 2% from a year ago, to 50.7 million.
• Google stopped sending people. From the shareholder letter: “During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week.” If that continues, Reddit says total DAUq “could fall in Q4, by a low-double-digit percentage” from 130 million. That is at least 13 million daily users.
• A login wall. Reddit will start testing a logged-in-only site in select markets outside the U.S. this quarter. CEO Steve Huffman told CNBC search referrals fell because of Google’s “shift to AI mode and AI overviews.”

The stock had already slipped 10.2% in the four sessions before the report, from $144.25 to $129.60. I found no single sourced cause for that part.

Did the business change, or just the price?

My test for any stock that falls this hard: did the business change, or did only the price change? With Reddit, the money did not change. The audience did.

Revenue still grew 53%. Net income was $283 million, up 74%, and adjusted EBITDA was $402 million, a 45% margin. Free cash flow was $363 million. That is not a broken business.

But daily users went nowhere between June and September, 130.3 million both quarters, and management is now telling you the number goes down in Q4. Revenue growth has gone from 70% to a guided 38% to 42% in a year. The market paid for a company that grows users and price at the same time. It now has one of the two.

The label check: 130 million users, but whose?

Reddit’s headline number is 130 million daily users. Look inside it. 76.8 million of them, 59%, were logged out. Logged-out visitors are where search traffic lands, and Reddit says the search decline hit logged-out and web traffic hardest. Only 53.5 million were logged in.

Reddit’s own letter says logged-in and app users together are “over 80% of the monetization on Reddit.” So the logged-out web crowd, the majority of the headline number, brings in under 20% of the money. And logged-in users are still growing: 53.5 million, up 7% from a year ago.

So a big share of Reddit’s user count was Google’s traffic, on loan. Google decided to answer the question itself, and the loan got called. Reddit also sells its data to Google. Citizens put it plainly after the report: “search changes highlight the problem with selling content to Google.” Same lesson as FICO: if someone else controls your moat, they can drain it.

Is it cheap now?

Reddit has 206.3 million fully diluted shares. At $91.73 that is about $18.9 billion. It has $3.03 billion in cash and marketable securities and no debt on the balance sheet, so the business itself is valued at about $15.9 billion.

Over the last four reported quarters Reddit earned $992 million in net income and $1.20 billion in free cash flow. That puts the stock at about 19.1 times trailing earnings, and the $15.9 billion business value at 13.3 times trailing free cash flow. Two caveats. Free cash flow does not count stock-based pay, which was $136 million (with related taxes) in Q3 operating expenses alone. And trailing numbers look backward, right when management is telling you users are about to fall.

Reddit bought back 670,000 of its own shares in Q3 at an average of $149.81. Friday’s close is 39% below that. It has $660 million left on its buyback authorization.

Wall Street cut hard. Oppenheimer downgraded to Sell. KeyBanc and Citizens moved to Hold. Wells Fargo cut its target to $110 from $142, Goldman to $140 from $215, and Citi to $186 from $245. A $110 to $186 spread among the cuts alone says nobody knows yet what Reddit looks like behind a login wall.

What I’d need to see

1. The Q4 user count. Management warned of a low-double-digit drop from 130.3 million. A Q4 number above 117 million, a drop under 10%, would beat management’s own warning. Last year Q4 results came out February 5.
2. Logged-in users keep growing. 53.5 million in Q3. If that number grows again in Q4 while the total falls, the users who pay are staying.
3. Results from the login tests. Do logged-out visitors in the test markets sign up, or leave? The shareholder letter does not say when test results will be shared.
4. The Google data deal. Huffman told CNBC Reddit is “in negotiations” with Google and will “only do a deal that makes sense for Reddit.” The terms of any renewal matter.

My take

Reddit did not lose its business this week. It lost the traffic Google was lending it, and by Reddit’s own count that traffic is under 20% of the money. Ad revenue still grew 54% last quarter, the company ran a 45% adjusted EBITDA margin, and it has no debt.

But I would not pay for a growth stock until I know which way its users go. I’d wait for the Q4 report, and the number I’d watch is logged-in users, not the 130 million headline: if the 53.5 million keeps growing while Google’s traffic leaves, Friday was a 29% drop over the wrong number imo.

Last week’s big mover: Flex, down 24.5% with the AI hardware trade.

I’m not a licensed financial advisor. This is how I’m thinking about Reddit, not a recommendation to buy or sell it. Prices as of the October 30, 2026 close. Research and data by Nova Skye, AltStation’s AI analyst. The take is mine.

Sources:
Reddit Q3 2026 results and Q4 guidance (SEC);
Reddit Q3 2026 shareholder letter: search traffic, DAUq split, login plan, balance sheet (SEC);
Reddit 10-Q for the quarter ended September 30, 2026: buyback (SEC);
Reddit Q2 2026 results (SEC);
Reddit Q1 2026 results (SEC);
Reddit Q4 and full-year 2025 results (SEC);
CNBC, October 29: estimates, Huffman interview;
CNBC, October 30: worst day since the IPO, Citizens note;
TipRanks, October 30: downgrades and target cuts;
IPOScoop, $34 IPO price.
Price and volume history from Yahoo Finance.