Steve Huffman's Reddit had its worst day as a public company, falling 29% as Google's AI search cut its traffic

Friday's tech sell-off was mostly about chips, but one of its sharpest moves came from a company that sells no hardware at all. Reddit lost nearly a third of its value in a single session after telling investors that Google's AI search tools are sending it fewer visitors.

Reddit: a record drop

Reddit closed down 29.22% at $91.73, according to CNBC and Yahoo Finance data. CNBC said it was the stock's worst day since the company went public in 2024, surpassing the 20.99% drop on July 31. Reuters said the shares hit their lowest level in more than a year.

The third quarter beat expectations on earnings and revenue, and sales grew 53% from a year earlier, CNBC reported, though that was slower than in previous quarters. The forecast disappointed: Reddit projected fourth-quarter sales of $1 billion to $1.03 billion, below the $1.05 billion analysts expected.

The bigger worry was traffic. In its earnings materials, Reddit said search traffic in October had "dropped by more than 1 million referrals on average per week," The Verge reported. Reuters said the company warned that daily active unique visitors could fall by a low double-digit percentage in the fourth quarter if referral traffic kept declining.

"The reality is, AI Mode does not drive traffic. Not for us, and not to anybody, as far as I know." - Steve Huffman, Reddit CEO, on the company's earnings call, as reported by The Verge

Reddit still appears in Google results, but users increasingly get answers from Google's AI tools without clicking through, Reuters said. The same shift is hitting news publishers, education platforms and review sites, it added.

Logging in to read

Reddit also said it will test requiring users to log in to access content, a significant change for a site whose discussions have been easy to read without an account, CNBC reported. Huffman told CNBC the change is meant to grow the base of logged-in users, who are more active and more valuable to advertisers.

"Reddit is the last platform to provide basically unfettered logged-out access, and that's largely because of me. I've been holding that line." - Steve Huffman, to CNBC

Separately, Reddit said it extended its cloud services agreement with Google through 2029, committing to spend $580 million over three years, according to Reuters. Several brokerages cut their price targets on the stock after the report, Reuters said.

Guidance sank Roblox and Twilio

Roblox closed down 18.05% at $42.99, Yahoo Finance data show. CNBC said the gaming platform projected fourth-quarter bookings of $1.89 billion to $2 billion, while analysts had expected $2 billion.

Twilio fell 15.24% to $205.03. CNBC reported that the company guided fourth-quarter revenue to $1.595 billion to $1.605 billion, with organic growth of 11% to 12%, down from 16% organic growth in the third quarter.

Pinterest fell nearly 8% during the session after missing third-quarter revenue and profit estimates and guiding holiday-quarter revenue below forecasts, Reuters reported.

Beats that were rewarded

Not every report was punished. Regeneron closed up 13.33% at $927.89, according to Yahoo Finance data. CNBC said the biotech earned $20.07 a share, excluding items, on revenue of $5.12 billion, well above the FactSet consensus of $16.42 and $4.56 billion, and raised its outlook for non-GAAP gross margin on net product sales to about 86%.

AstraZeneca rose after cancer drugs powered a third-quarter profit beat, with core earnings of $2.79 a share on revenue of $16.21 billion against expectations of $2.60 and $16.05 billion, CNBC reported. Mondelez added more than 3% at midday, CNBC said, after adjusted earnings of 78 cents a share topped the 71-cent estimate.

What it means

Friday's reaction showed how sharply investors are separating companies whose business models are exposed to AI from those benefiting from it. Reddit's numbers were solid on the surface, but its outlook depends on traffic it does not control, and that was enough to wipe out a large part of the stock's value in one session.