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.

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[–] 1 point 5 minutes ago

Good. Let it burn to the ground

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  • [–] 2 points 6 hours ago

    Good, only 70% more to go until we can all tell Spez to gfy one last time!

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  • [–] 11 points 10 hours ago (2 children)

    Gosh. You mean making it harder and harder to access their platform without giving up anonymity is hurting their business model? Well jack me off and call me Betty. When will it all make sense.

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  • [–] 3 points 7 hours ago
    [–] 8 points 10 hours ago (2 children)

    “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.


    Personally I am glad investors are worried they wont own enough users.

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  • [–] 3 points 10 hours ago (1 child)

    Also, didn't Reddit close up and start charging for their API because of this exact issue and related AI stuff? Spez is now mad that there are effects from what they implemented?

    I mean, what else were they expecting when they exchanged money for API access to a search engine that explicitly pushed their AI "answer" feature? I'm bewildered at how so many companies complain about not being able to see the consequences of their own actions that were told to their face would happen.

    At this point there is no way this isn't intentional from the start.

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  • [–] 12 points 14 hours ago (2 children)

    Reddit’s failure was inevitable; once capital exerts excessive control, it’s time for people to leave. Everyone has surely had the infuriating experience of being bombarded by trashy ads on Reddit often with no human customer support available to address complaints. It has become a hub overrun by bots and scams; when you enter a subreddit, almost everything you see is just bots.

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  • [–] 2 points 10 hours ago* (last edited 9 hours ago)

    We really do need to get back to a tech landscape where evil ceos are shunned and their products not used. We have tolerated the spez, musk, thiel, zuckerburg, ellison, bankman-fried, elizabeth holmes, Kalanich (uber), baszuskis (roblox) types for way too long. They are all a bunch of mega pricks and their companies should pay a penalty for their being openly evil.

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  • [–] 2 points 10 hours ago

    love it. Hopefully it continues.

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  • [–] 1 point 8 hours ago (1 child)

    I haven't used Reddit with an account for months because they're dead set on attaining my ID just to give me access to my damn account

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  • [–] 11 points 15 hours ago* (last edited 42 minutes ago)

    Fuck you u/spez. Fucking usurper.

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  • Hey, you know what will make it easier for people to read our posts? Log in only. Also if we suck it's googles fault.

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  • [–] 11 points 17 hours ago* (last edited 16 hours ago) (5 children)

    Good.

    I enjoyed pre-COVID Reddit, where you could find all political stripes and religions, a virtual "melting pot".

    Today? It's like Lemmy but with advertising. So much more homogeneous, and the moderators are deranged. Let them rule their dying empire with furry fists, have at it, it's yours now

    Reminded now, right before I left Reddit I was banned from r/pics for being a member somewhere that they don't approve of, I can no longer recall which sub but it was lightly Republican flavored (my favorite political adversaries).

    Why would they care? How would they know what the sub was intolerable without joining themselves? Why didn't they ban themselves then? They were despoiled, like me.

    Senseless. I haven't visited since the login requirement, piss off

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  • [–] 7 points 16 hours ago (3 children)

    Today? It’s like Lemmy but with advertising. So much more homogeneous

    Might have been a while since you visited it then, it's getting increasingly absurdly right wing - mostly bots I'm guessing. Pretty much all of the main /r/all subs

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  • [–] 5 points 15 hours ago

    Yep. Recently there was a post about the UK looking at raising the minimum wage to about £13.20 (17.50USD) an hour. On reddit it was endless comments complaining that minimum wage is too high. Most unhinged take I saw was that this will make the cost of living worse.

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  • [–] 7 points 15 hours ago

    Private profit from community kind of sucks. Thus, reddit sucks. Fuck them.

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  • [–] 11 points 18 hours ago

    It's still surprising to me that 2 years later, it's still double the value it was when it went public.

    There was never any believable story where they would go public and become profitable.

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  • [–] 5 points 15 hours ago

    finally, the market noticed the fact that I haven't logged in for 3 years now!

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  • [–] 4 points 17 hours ago

    Reddit failed at it's original purpose. Hope you like your yacht payments

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  • [–] 31 points 1 day ago (1 child)

    Whats the point to appear in google search, when you gonna lock your platform to have accounts to view the content.. Just asking.

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  • [–] 3 points 17 hours ago (1 child)

    Seems to me the issue here is overall strategy.

    The overall strategy seemed to have been foster discussion, then sell that content to AI scrapers and search engines while also collecting ad revenue.

    Problem is, if the AI search engine scrapes the answer out of the discussion, they'll often answer the user's question and thus you won't get the ad revenue from the click. And if you need to log in to see the discussion you'll lose the ad revenue from search referrals.

    In short- 'we created a business letting others cannibalize the value out of our database and now we're shocked there's less value in our database'.

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  • [–] 3 points 15 hours ago*

    Reedits value was always in its community. When they started pissing off the community that vanished at which point all they had left was the data set so they sold that because they didn't have anything else of value and now that ship has also sailed.

    The way back for Reddit would be to get rid of the toxic leadership but they won't do that so they'll just spiral into irrelevance.

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  • [–] 18 points 1 day ago

    they hurt thier own traffic by banning users, and the people who use accounts to earn money through the site or OF in general, and not the propaganda bots.

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