Google's AI search is draining Reddit's logged-out audience by the millions each week, and Reddit's proposed fix could shrink that audience even further before it saves the company.
Reddit (NYSE:RDDT | RDDT Price Prediction) CEO Steve Huffman opened the company’s third-quarter call on October 29, 2026, with a problem he cannot fix himself: “Our search referral traffic was down meaningfully in Q3, with the decline accelerating later in the quarter.”
In October, search referrals fell by more than 1 million per week on average. He blamed Google’s AI Overviews and AI Mode.
Reddit will respond by fully testing a logged-in-only experience in select markets outside the U.S. in the fourth quarter. “This is a test, but we are going to make this transition,” Huffman said.
Reddit’s 27 billion posts and comments have never been worth more to AI companies. Yet AI search is cutting off the free traffic that built its audience, and a login wall could shrink that audience further before it helps.
Shares closed at $129.60 on October 29 and are down 43.62% in 2026. Google parent Alphabet (NASDAQ:GOOGL) fell 12.64% to $283.82 the same day after its own earnings report.
The firm commitment now is a fourth-quarter test in unnamed non-U.S. markets. Reddit did not disclose which countries, when a global launch would start, or how much revenue logged-out visitors generate.
Logged-out visitors can still browse the main reddit.com site. Only the legacy Old Reddit site requires a login, a change made this summer because its logged-out version was “a significant source of abusive scraping and automated traffic on the platform.”
Search referrals mostly bring logged-out visitors. U.S. daily active uniques (DAUq, Reddit’s count of daily users) fell 2% to 50.7 million, the first U.S. drop since the 2024 IPO, while international DAUq rose 24% to 79.6 million.
Total DAUq held at 130.3 million, flat with the prior quarter. Huffman warned that if the decline continues, total DAUq “could fall in Q4 by a low double-digit percentage” from a 130 million base, a warning management framed as dependent on current trends.
Huffman said, “The reality is the AI mode does not drive traffic.”
Revenue rose 53% to $895 million, ahead of the $878.4 million estimate. Net income grew 74% to $283 million, or $1.40 per diluted share, and adjusted EBITDA rose 70% to $402 million.
Fourth-quarter guidance calls for $1.00 billion to $1.03 billion in revenue, but adjusted EBITDA of $480 million to $510 million is missing the $512.2 million estimate, and shares sank after the report.
Logged-in users drive more than 80% of monetization. Reach can fall faster than revenue if enough casual visitors sign up.
“Google is crawling us as hard as ever, so the demand hasn’t changed from their point of view either,” Huffman said.
Asked whether a login wall makes Reddit harder to scrape, he answered, “For sure.” That protects licensing deals with OpenAI and Google and supports lawsuits against Anthropic, Perplexity AI and three data-scraping firms.
Huffman offered no new licensing terms. He said only that Reddit is “in active discussions.”
Reddit makes more per user each quarter, but the next report will likely show a shrinking audience, and advertisers tend to follow reach. The positive case needs proof that casual visitors convert to logged-in accounts at scale, and Reddit has disclosed no conversion data from the test yet.
The reason is Reddit’s fourth-quarter report. If total DAUq holds near 130.3 million while logged-in users keep growing, the login strategy is likely working, but a low double-digit drop would show the audience loss is outweighing it.
Contact [email protected] for any questions or corrections.
Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
Reddit beat earnings six quarters straight yet its stock sits deep in the red, and the Oct. 29 report hinges on whether a brand-new AI ad tool can convince investors the slowdown is temporary.
Reddit beat earnings estimates and raised guidance, yet the stock cratered anyway after four words from the CEO spooked investors. Now the platform's own users are fighting each other over whether the selloff is…
Reddit slides into its Q3 earnings report carrying a 44% year-to-date loss and mounting questions about whether slowing U.S. user growth can be offset before Wall Street loses patience entirely.
Reddit just retired a key user metric the moment it started showing cracks, and at least one investor thinks that timing is no coincidence. What the number revealed about logged-in users could complicate the…
Reddit just posted a beat-and-raise quarter yet its stock is cratering while Alphabet surges, and the reason why reveals a fault line running through every social media investment thesis right now.
Reddit's business is compounding at a pace few public companies can match, yet the stock keeps sliding. Jim Cramer sees a disconnect so extreme he used a word he rarely applies to growth names.
Reddit stock is sliding hard into its earnings report while Meta barely flinches, and the gap between them tells a story about which ad model investors trust right now.
Reddit is threatening to pull the plug on Google's access to its massive trove of human conversation data, and the market reaction has been swift and brutal. Whether this standoff becomes a goldmine or…
Reddit sits at the intersection of AI training data, social commerce, and authentic human conversation, making it one of the most strategically valuable assets on the internet right now. But super-voting insiders hold the…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them. © 2026 24/7 Wall St.
About the Author
