Oct 30 (Reuters) - Reddit shares tumbled 29% on Friday, marking their biggest single-day drop and hitting their lowest level in over a year, after the company warned that Google’s AI-powered search was hurting referral traffic and could shrink its user base.
The online discussion platform still appears in Google search results but is attracting fewer clicks, as users increasingly rely on the tech giant’s AI tools for direct answers.
"When more than a million search referrals a week disappear because Google’s AI answers the question itself, investors are no longer looking just at the next three or four months, but at how much of Reddit’s audience it will really own in the years ahead," said Vitor Madeira, senior market specialist at Capital.com.
Reddit warned that its daily active unique visitors could fall by a low double-digit percentage in the fourth quarter if referral traffic kept declining.
If current losses hold, Reddit is set to lose more than $7 billion in market value and Pinterest about $900 million. The two stocks have fallen about 44% and 23%, respectively, this year through their last close.
Reddit has a 12-month forward price-to-earnings ratio of 19.03, compared with Snap’s 7.53 and Pinterest’s 8.48, according to LSEG data.
Separately, Reddit on Friday said it has extended its cloud services agreement with Google through 2029, committing to spend $580 million over three years.
At least 11 brokerages cut their price targets on Reddit, and at least 13 did so on Pinterest.
Not only that, they're mandating login. I think that was announced yesterday
they removed old reddit for lurkers. who knows when they will affect apps like redreader, or reskinning extensions.
If 80% of their advertising revenue comes from logged in users and they mandate login, soon 100% of their revenue will be logged in users. It won't be more dollars than it is now, but they will have successfully stopped those other 20% from seeing ads.
Their whole philosophy is bizarre. Instead of letting a random from a Google search get lost in a series of recommended topics, browsing the sub, or searching for more stuff inside Reddit until they see an opinion they just need to respond to, they instead want to put up barriers to new user acquisition.
its going to be like chegg, and QOURA soon, and facebook.
This is 100% to make it harder for non-paying AI scrapers. Their business is mostly selling data to LLM companies now. This won't stop non-paying scrapers but now they will have to make accounts and it will be easier to spot and stop.
They are still shooting themselves in the foot by almost completely killing search engine traffic but this is their reasoning behind it. Once again a company killing their future for the quick buck.
this has no effect on the scrapers , thats what spez is saying. you can simply automate account creation easily, plus they intend to keep these accounts long term anyways.
The AI scrapers just make new user accounts anytime they need one. Requiring login barely even slows them down.
If I were a stockholder, that'd be cause for me to sell. Reddit's main value comes from the fact that it's constantly acquiring new users, primarily from search engine results. Keeping users is easy enough (there are still people logging into Facebook every single day), but consistently gaining more users than losing year over year is an incredibly valuable metric to an investor. Mandatory logins would immediately bottleneck that incoming stream of users, does little to retain existing users, and is likely to scare off a statistically significant amount of existing users. This would be a huge red flag for me to dump my Reddit stock.
That only works for Facebook because of network effects. Your aunt Bertha is on Facebook and won't leave, and won't use anything else. So, the only way to keep in touch with her is to stay on Facebook.
Are there really people on Reddit that you care about, and that you can't otherwise keep in touch with?
The communities on Reddit are another matter. Some of the sports ones never migrated to Lemmy at all, so there isn't a good way to discuss things there. There are a few others I miss. But, it's not worth putting up with Reddit for them.
True. I used to launch Firefox in private mode to see if they had shadow banned one of my posts again (WAY too often, the answer was "yes") and just about a week ago I could not do that any more and began insisting on a log on.
For other reasons, though, I've since committed a reddit suicide, insisted on a permaban (that was harder than I expected) and found y'all. I'm loving it.
Redlib still works for now.
I've been using https://redlib.catsarch.com/ and https://redlib.blueberry.reallyaweso.me/
Switching between the two when one of them doesn't work.
Same, I'm done. I haven't had an active account since the api bank. I was fine browsing old reddit on ff, but that's gone.
Almost 20 years gone, I fucking hate this so much. They just couldn't let it be with continual growth and now they'll have nothing.