Reddit Shares Plummet 30% After Google AI Impact

Reddit shares tumbled 30.44% last Friday. The decline was driven by warnings from CEO Steve Huffman regarding a loss of traffic from Google searches. Artificial intelligence tools that summarize answers directly on the search results page have reduced clicks to the site.

The third-quarter financial results showed revenue of $895 million. Earnings per share beat analyst expectations at $1.40. However, the daily active user base fell short of projections with a 2% drop in the U.S. market.

The company projected sales between $1 billion and $1.03 billion for the fourth quarter. This figure fell below market estimates. The company plans to test mandatory logins to view content as a strategy to retain users.

The CEO stated that referral traffic from Google dropped by more than one million per week during October. He highlighted that the search engine's AI features do not direct visitors to external platforms. This scenario creates uncertainty regarding the company's ability to grow its user base in the long term.

Reliance on major search platforms to generate organic traffic makes tech companies vulnerable to changes in artificial intelligence algorithms. This sector risk may increase volatility in technology assets and impact risk appetite in the global market.