Reddit shares sink 29% on weak Q4 outlook and traffic fears
In short
Reddit shares fell 29% after the company warned that weaker Google Search referrals could cut daily users by a low double-digit percentage in Q4. Its revenue outlook also missed estimates, even though third-quarter revenue rose 53% from a year earlier.
The stock had one of its worst one-day falls. It is still unclear how much traffic will drop or how long the pressure will last.
What the reporting says
Reddit shares fell 29% after the company warned that weakening Google Search referrals could lead to a low double-digit decline in daily users during Q4. The company also gave a revenue forecast that missed expectations, even though third-quarter revenue rose 53% year over year and beat estimates. The reporting does not say how much traffic could fall beyond the Q4 warning or whether the share drop will continue.
Why it matters
Reddit shares plunged 29% after management warned that weakening Google Search referrals could cause a low double-digit decline in daily users during Q4. The company’s revenue forecast also missed expectations, even though third-quarter revenue rose 53% year over year and beat estimates. The immediate impact is sharply negative for the stock, but the longer-term effect on user growth and revenue is still uncertain.