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.
Oh no, hope Spez still has money to maintain a cadre of slaves on a billionaire island (since he’s a natural leader and everything)
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.
You’re already paying for the hour Betty. "It’s $10 for a BJ, $12 for an HJ, $15 for a ZJ.
Shit honey - for you I’ll hit the stopwatch.
: D
If you have to ask big man, you can’t afford it
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.
They also don’t let people lurk anymore.
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.
Fuck you u/spez. Fucking usurper.
Good. Let it burn to the ground
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
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
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.
Yeah I haven’t been there for a couple of years. When I left it was a Democratic stronghold that had banned The Donald. Not as hard left as Lemmy, but close.
My ideal place would be “neutral” with all flavors, but I haven’t found anything like old Reddit yet, so I am taking a sabbatical here for as long as I am tolerated (probably another week)
Your posts here get banned for anti muslim hatred and terroristic zionism. Hopefully it wont take a whole week for a siteban for people like you.
The moderators on Reddit have been a pain for a long time. Here was always so much drama
It’s like Lemmy but with advertising.
Especially compared to https://old.lemmy.world/
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.
“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.
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.
Reddit used to be a great free to use information source and community creation tool.
It was counter to the commoditization of both.
It was inevitable that capital interests would destroy it.
Private profit from community kind of sucks. Thus, reddit sucks. Fuck them.
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
I found that, if they’re asking for ID, you’re about to get banned. They do that to make ban evading harder.
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.
finally, the market noticed the fact that I haven’t logged in for 3 years now!
Good. Fuck spez.
Burn, burn, burn!
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’.
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.
