Reddit shares fall over 25% as CEO blames Google AI Mode for lost traffic
Reddit's share price fell by more than 25 percent despite strong earnings, after CEO Steve Huffman disclosed that the company lost more than one million Google search referrals per week in October. The Decoder, which reports the story, says AI Mode has hit Reddit's stock as well as Google's.
Huffman blames Google's AI Overviews and AI Mode. His words: "AI Mode does not drive traffic. Not for us, and not to anybody as far as I know. That's just a fundamental shift in how Google works."
Reddit's position is that demand for the platform has not changed; Google simply stopped sending users there. In response, Reddit is testing login walls outside the U.S. The aim is to curb scraping and reduce its dependence on the open web. The Decoder describes Huffman as seeing this as a trade-off: less reach in return for deeper engagement.
Data licensing talks with AI providers continue. It is not certain, though, that Reddit will close further deals. The Decoder notes that Reddit already had a deal with Google and profited from it massively.
The Decoder's own conclusion is that what is hitting Reddit is a warning for the entire web: any business that depends on Google for traffic faces the same structural risk.
Key facts
- Reddit shares dropped over 25 percent despite strong earnings.
- CEO Steve Huffman said Reddit lost more than one million Google search referrals per week in October.
- Huffman blames AI Overviews and AI Mode, saying AI Mode does not drive traffic "not for us, and not to anybody as far as I know".
- Reddit is testing login walls outside the U.S. to curb scraping and reduce its dependence on the open web.
- Data licensing talks with AI providers continue, but further deals are not certain.
Why it matters
A public company has tied a sharp share-price drop to a specific traffic loss: more than one million Google search referrals per week in October. Huffman's claim is that Google's AI Mode changes how Google works at a basic level, because it does not send users onward. The Decoder reads the Reddit case as a warning for the whole web, since any business that depends on Google for traffic faces the same structural risk.
Who it affects
Reddit and its shareholders first, since the stock fell over 25 percent. Beyond that, the Decoder says any business that relies on Google for traffic is exposed to the same risk. Reddit's login-wall test outside the U.S. also changes things for users there, who would be asked to log in, and for scrapers, which the walls are meant to curb.
How to use it
This is a news report, not a tool or a service, so there is nothing to adopt. The practical reading for anyone running a site is the response Reddit chose: testing login walls to limit scraping and lean less on the open web, accepting less reach for deeper engagement. Reddit is also continuing data licensing talks with AI providers.
How solid is it
The share drop, the one-million-per-week figure and the quote are reported from Huffman's statements as relayed by The Decoder. The claim that AI Mode drives no traffic to anyone is Huffman's own, hedged with "as far as I know", and the report offers no independent data on other publishers. It gives no baseline for Reddit's weekly referrals, so the loss cannot be expressed as a percentage. The statement that other businesses face the same risk is The Decoder's assessment, not Huffman's.
Risks and caveats
The report names no exact dates for the earnings or the statement and gives no share price level. It does not say which countries get the login-wall test or on what timescale, and it gives no Google response. It does not state the terms or value of Reddit's existing deal with Google. Whether Reddit will close further data licensing deals is uncertain, and the login walls carry a stated cost in reach.
“AI Mode does not drive traffic. Not for us, and not to anybody as far as I know. That's just a fundamental shift in how Google works”
— Steve Huffman, CEO of Reddit