Reddit Shares Drop as Search Traffic Falls, Sign-In Push Planned

SAN FRANCISCO — Reddit shares fell more than 10% in extended trading on Thursday after Chief Executive Steve Huffman warned that falling search referrals could cut the site’s daily visitors by a low double-digit percentage in the fourth quarter.

Huffman outlined a plan to make signing in mandatory for most content, according to Reuters. The company is grappling with data scraping and with search referral traffic that has declined in recent months.

Search referrals dropped by more than 1 million on average each week during October, Huffman said. Daily active uniques in the United States, Reddit’s biggest market by revenue, fell 2% to 50.7 million.

Worldwide, the picture was different. Reddit said daily active uniques rose 12% year over year to 130.3 million in the third quarter, and weekly active uniques rose 16% to 515.2 million.

The numbers came in the company’s third-quarter results, released after the market closed. Revenue rose 53% to $895 million, above the $878.4 million average estimate compiled by LSEG, according to Reuters. Net income was $283 million, and diluted earnings were $1.40 per share. Ad revenue rose 54% to $847 million.

For the fourth quarter, Reddit forecast revenue of $1 billion to $1.03 billion, largely in line with estimates. It put adjusted earnings before interest, taxes, depreciation and amortization at $480 million to $510 million, against estimates of $512.2 million.

Huffman said logged-in users account for more than 80% of the company’s monetization. Reddit plans to test a logged-in-only experience in select markets outside the United States in the fourth quarter before deciding on a wider rollout, according to Reuters.

The push is also about who gets to use Reddit’s data. The company licenses its corpus to OpenAI and to Alphabet’s Google, and it has sued Anthropic, Perplexity AI and three data scraping companies, accusing them of illegally collecting Reddit’s data, according to Reuters.