Key Highlights

  • Reddit (NYSE:RDDT) fell about 25% on October 30, 2026 after third quarter Revenue rose 53% to USD 895 million, above estimates of about USD 875 million, in what was its worst day since its 2024 debut.
  • US daily active users fell 2% to 50.7 million, and global users reached 130.3 million, below expectations, according to the company Shareholder letter and published market data.
  • Fourth quarter revenue is guided to USD 1.00 billion to 1.03 billion, below the roughly USD 1.05 billion consensus, and management warned that daily users could fall by a low double-digit percentage.
  • Google search referrals dropped by more than 1 million a week on average in October, a trend the shareholder letter said was accelerating later in the quarter.

Strong Revenue, Weak Users

Reddit (NYSE:RDDT) reported third quarter revenue of USD 895 million, up 53%, ahead of analyst estimates of about USD 875 million. The market focused instead on users. US daily active users fell 2% to 50.7 million and global users of 130.3 million missed expectations. The shares dropped more than 22% in the opening hours and ended the day down about 25% in published accounts, putting them down roughly 46% for the year at the time of the morning move. Oppenheimer and KeyBanc downgraded the stock, and Citi, Guggenheim, Needham, Bank of America, Cantor Fitzgerald and Wells Fargo cut price targets.

Why Search Traffic Matters

Reddit relies on search engines to send new visitors, many of whom arrive without logging in. The shareholder letter said search referral traffic was down meaningfully and that the decline was accelerating later in the quarter. Management warned that if the October pace continues, fourth quarter daily users could fall by a low double-digit percentage from a base of about 130 million. Logged-in and app users generate over 80% of monetization, so the company plans to test a mainly logged-in experience in select international markets in the fourth quarter. That would favor higher value users but could shrink total traffic further, a trade-off the company has not yet quantified.

Risks and What to Watch

The main risk is that fewer visitors lead to lower Advertising reach, which would put the USD 1.00 billion to 1.03 billion revenue guide under pressure. Analyst targets now range widely, from USD 110 at Wells Fargo to USD 186 at Citi, which shows how uncertain the outlook is. The logged-in test may help revenue per user but may hurt growth. The broader sell-off in communication services and technology, with the Nasdaq Composite down about 2.9% on October 30, adds pressure. Reddit (NYSE:RDDT) next reports in February 2027, and any user data before then would come from third party estimates, which can differ from company figures.

Where Things Stand

A social platform lost about 25% in a day because the next quarter looks weaker than the last. Reddit (NYSE:RDDT) is growing revenue fast, but search referrals are falling and user numbers are slipping, which are the inputs for future ad sales. The balance of evidence points to a valuation reset on growth risk, not a collapse in current revenue. The next test is whether the logged-in experience and other changes can offset lost search visitors in the fourth quarter.