Reddit plunges as Google AI search squeezes traffic

Oct 30 (Reuters) - Shares of ‌Reddit tumbled 23% ​in ​premarket trading on Friday after it warned Google's growing use of AI in search was hurting referral traffic and could ‌shrink its user base, offering fresh evidence of AI-driven disruption.

Pinterest ⁠also fell 7.28% after forecasting fourth-quarter revenue below Wall Street estimates, as a pullback ‌by cross-border sellers in Europe ‌weighed on its outlook.

Here are more details:

• Reddit's warning highlights how Google's shift toward AI-powered search, which can answer queries directly, is disrupting ​the flow of traffic to websites that have traditionally relied on the search engine for users

• Total daily active unique visitors could fall ⁠by a low double-digit percentage in the fourth quarter from about 130 million if referral traffic ​continues to fall, Reddit said

• JPMorgan analysts said the expansion of Google's AI Overviews and AI Mode, along with ​changes to how machine-translated content is ranked, ‌has pushed search traffic down

• A reset in expectations is appropriate and the near-term outlook is increasingly clouded, ⁠said Piper Sandler analysts

• Meanwhile, Reddit said in a filing it had extended its cloud services agreements with Amazon Web Services and Google through 2029, committing to ⁠spend $880 million and $580 million, respectively, over three years

• Pinterest's third-quarter revenue of $1.17 billion missed ​analysts' estimates of $1.21 billion, according to data compiled by LSEG

• Pinterest forecast fourth-quarter revenue of $1.425 billion to $1.475 billion, below Wall Street estimates

• RBC analysts said changes to the ‌EU's de minimis exemption hit cross-border sellers sooner and harder than expected, leaving Pinterest's European revenue flat

• Reddit ‌had fallen about 44% this year and Pinterest about 23% through Thursday's ⁠close

• If current losses hold, Reddit ‌is set to lose $5.7 ​billion in market value and Pinterest more than $800 million

(Reporting by Anzar Mehraj in Bengaluru; Editing by Leroy Leo and ‌Jonathan Ananda)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Chocolate makers get Halloween fright as health-conscious US shoppers cut back
• Canada's economy stalls again in August, likely lost ground in September
• Exclusive-Fluor Corp among US firms vying for Kenya critical minerals project, minister says