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Reddit shares drop and it plans login requirement as search traffic sinks

cnbc.com9 points6 comments
Screenshot of Reddit shares drop and it plans login requirement as search traffic sinks

Reddit plans to test requiring people outside the U.S. to log in before accessing its platform, a significant change for a service long open to anonymous browsing. CEO Steve Huffman linked the move to a sharp decline in referrals from Google, as AI Overviews and other AI features alter how search directs people to websites. Reddit has not set a date for a broader rollout or decided what logged-out visitors will still be able to view. Its strategy is to build direct visits, app use and logged-in activity, which are more valuable for ad targeting and less dependent on search traffic.

The announcement came alongside third-quarter results that beat expectations: revenue was $895 million and earnings per share were $1.40. Revenue rose 53% year over year, while daily active unique users increased 12% to 130.3 million, below analyst forecasts; U.S. daily users fell 2% to 50.7 million. Average revenue per user exceeded expectations, and data-licensing revenue grew 35% to $48 million. However, Reddit forecast fourth-quarter revenue of $1 billion to $1.03 billion, short of the $1.05 billion analysts expected, and its shares fell more than 15%. Huffman said the company will keep spending on marketing to counter weaker search referrals and is still negotiating with Google over its data-licensing agreement.

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