Reddit Shares Tumble on Weak Outlook as Platform Prepares Mandatory Login Shift Amid Google Traffic Decline

Reddit announced plans to require all users to create accounts to access the platform, marking a fundamental shift for the site long known as “the front page of the internet.” The revelation came alongside third-quarter earnings that topped analyst estimates on both revenue and profit but offered disappointing fourth-quarter sales guidance, sending shares down more than 15% in after-hours trading.

The company reported earnings of $1.40 per share on revenue of $895 million, surpassing LSEG consensus estimates of $1.35 per share and $878 million, respectively.

Chief Executive Steve Huffman told CNBC that search-referral traffic from Google declined “meaningfully in this quarter” due to the search giant’s shift toward AI Mode and AI Overviews. That downturn played a direct role in Reddit’s decision to move toward mandatory registration.

A previous Google algorithm update designed to surface “authentic” forum content had fueled Reddit’s user growth in recent years. However, the continued rollout of AI-driven search features has eroded that referral pipeline.

“I think fundamentally that relationship between Google and the rest of the internet is evolving,” Huffman said. “For us, this means a continued focus on our core users that come to Reddit directly.” He described Google’s AI efforts as “a fundamental shift in how the Google product works, from being a traffic driver to whatever’s going on now.”

Huffman did not specify a timeline for the login requirement, noting the implementation involves significant complexity. Testing will begin in the fourth quarter outside the United States. The company is still determining what content will remain accessible to logged-out visitors.

Daily active unique users (DAUq) rose 12% year-over-year to 130.3 million, missing the 133.7 million consensus estimate. U.S. DAUq fell 2% to 50.7 million, below the projected 53.5 million. Huffman warned the search-referral headwind will persist into the fourth quarter.

Reddit monetizes logged-in users more effectively than logged-out visitors because registered users are more active and yield better targeting for advertisers. “The vast majority of our revenue comes from our app users, and logged-in users are direct traffic — both of those are up quarter-over-quarter,” Huffman said.

Third-quarter revenue grew 53% year-over-year, ending a streak of eight consecutive quarters of growth exceeding 60%. The company guided fourth-quarter revenue between $1.0 billion and $1.03 billion, short of the $1.05 billion average analyst estimate.

“It’s still a strong guide,” Huffman said. “We are still growing at an industry-leading rate, and that’s despite the headwinds from search referrals.”

Average revenue per user (ARPU) came in at $6.87, above the $6.50 expected. The “other revenue” segment, which includes data-licensing deals, jumped 35% to $48 million. Reddit’s primary data-licensing partners are OpenAI and Google.

Huffman said negotiations with Google over the data-licensing agreement are ongoing and that Reddit will only proceed with a deal that makes strategic sense.

Calling the registration plan a “big change” for someone who “grew up on the open internet,” Huffman acknowledged Reddit has been the last major platform to offer unfettered logged-out access — a stance he personally maintained. “I think users will probably go through the same understanding that I have, which is that it’s a sign of the times. It’s an evolution of how these platforms work.”

On the earnings call, Huffman framed the moment as consequential, likening it to his 2015 return to the company. “We had a lot of conversations then about what is Reddit and what is Reddit for, and what is our place in this ecosystem. And we’ve been having those conversations at Reddit recently.”

“Reddit’s mission is to create community and belonging for everyone in the world,” he said. “While there’s overlap between Reddit and other players in the ecosystem — whether we’re talking about social media or AI search — fundamentally, Reddit is communities and conversations.”

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