Reddit plunges as Google AI search squeezes traffic
Reddit shares dropped 23% premarket after warning Google's AI search is reducing referral traffic, potentially cutting daily active users by a low double-digit percentage. Pinterest fell 7.28% after forecasting Q4 revenue below estimates due to European seller pullback. Reddit extended cloud deals with AWS and Google, committing $880M and $580M over three years.
How this was made
The 30-second read
Why it matters
The AI-driven shift in search traffic threatens Reddit's user growth and ad revenue, while Pinterest's weak outlook pressures its valuation.
Market read
Reddit's traffic warning and Pinterest's revenue miss drive immediate downside in their stocks, signaling broader AI impact on internet traffic.
What to watch
Potential cost savings from reduced infrastructure spend not discussed.
Background
Reddit warned that Google's AI-powered search is cutting referral traffic, causing a 23% premarket plunge, while Pinterest forecast Q4 revenue below estimates, dropping 7.28%. Both companies extended cloud agreements with AWS and Google.
Ticker impact
Pinterest forecast Q4 revenue below estimates, leading to a 7.28% share decline.
potential further pressure if revenue miss persists
Revenue guidance below expectations may trigger continued selling.
Market effects
Online ad and social media platforms may see traffic pressure from AI search.
US tech stocks could face broader sell pressure.
Highlights AI's impact on internet traffic worldwide.
Counterpoint
If Reddit can diversify traffic sources, the impact may be temporary.
Key entities
- companyReddit
Social media platform reporting traffic loss due to Google AI search.
- companyPinterest
Visual discovery platform forecasting lower Q4 revenue.
- companyGoogle
Search engine expanding AI features that affect referral traffic.