Why Reddit stock plunged — Google AI Mode cut search visits by over 1 million a week

When Google rebuilt search around AI, the site that ranked most often in Google results took the first hit. Reddit shares fell 25% to 29% on October 30, 2026 (US time). In third-quarter results released after the close the day before, CEO Steve Huffman said Google's AI Overviews and AI Mode had sharply reduced search referrals. He put it bluntly: AI Mode does not drive traffic.

The numbers were specific. Google search referrals fell by more than 1 million a week on average in October. US daily users dropped 2%, the first decline since Reddit went public in 2024. It was a quarter in which revenue grew 53% and net income jumped 74%, yet the market reacted to the user count. And Reddit's answer was a login wall.

1. Strong results — but US users declined

Splitting users by login status makes the picture sharper.

The group that shrank was US logged-out users — people who arrived from a Google search, read one thread and left. Huffman said search referrals fell meaningfully in Q3 and the decline sped up toward the end of the quarter. October was worse. If the trend continues, he warned, total daily users could fall by a low double-digit percentage in Q4. Q4 revenue guidance of $1.0–1.03 billion still implies growth, but adjusted EBITDA guidance came in below market expectations.

2. Why Google AI Mode does not send traffic

Type a query into AI Mode and it shows an AI-written answer before any list of links. If the answer ends on the search page, the user never visits the source. Reddit had been the go-to result when people searched for real experiences, the kind of query that ends in 'reddit' — 'best X reddit'. AI now summarizes those experiences instead.

Huffman noted that Google still crawls Reddit as hard as ever, and that from Google's side demand has not changed. In other words, the content keeps flowing out while the visitors no longer flow back.

Google is not comfortable either. In its own Q3 results the same week, Alphabet acknowledged that AI Mode searches earn less than classic search ads.

Google has expanded ads next to AI Mode from a US test to all markets. Searches are up, revenue per search is down, and clicks to websites are falling. AI search is changing the math for Google, for publishers and for advertisers at once. The background to Alphabet's share drop is in "Why big tech stocks split after earnings".

3. Reddit's answer — a Reddit you must log in to see

Asked whether a login wall makes scraping harder, Huffman said "of course." Reddit has data-licensing deals with OpenAI and Google, and is suing Anthropic, Perplexity and three data-scraping firms. The login wall also strengthens that negotiating position. Huffman offered no terms for new deals, saying only that talks are active.

The cost is just as clear. Logged-out visitors from search were how most people first discovered Reddit. Closing the door blocks scrapers but also cuts off new users. Reddit has judged that focusing on paying, logged-in users is worth that loss.

4. A signal for the whole web

Reddit is one of the large sites most dependent on search traffic. When a company like that steps back from the open web toward a members-only model, it matters. Less human writing on the open web means less material for AI to learn from and cite. The same week, OpenAI was reported to be running a feature that blocks web pages it judges risky from ChatGPT browsing.

5. What remains and what is unconfirmed

• October 30 close: Not confirmed at the time of writing. Intraday declines of 25% to 29% were reported.
• Google's response: No official Google position on Reddit's claims could be found.
• Scope of the login test: Which countries come first, and when it might reach the US, is undecided.
• Q4 users: Whether the low double-digit decline Huffman warned of materializes will show in Q4 results.

Google's policy change to use Gmail and Photos content for ads is covered in "Google lets Gmail and Photos data shape ads".