Reddit loses nearly 30% of its market value following disappointing forecasts

Shares of Reddit fell by 29.22% on Friday marking their largest single-day decline since the company’s 2024 stock market debut after its fourth-quarter sales forecast fell short of analyst expectations. This occurred despite the company’s third-quarter results beating projections for both earnings and revenue.

Reddit projected fourth-quarter sales between $1 billion and $1.03 billion, falling below the $1.05 billion anticipated by analysts. The outlook reflects a slowdown in revenue growth, with platform traffic impacted by a decline in search referrals from Google a trend linked to the rise of AI-generated search summaries.

Additionally, Reddit plans to test a requirement for users to log in to access content, a move intended to boost the number of active users and increase advertising revenue. However, the proposal has raised concerns regarding the potential for user base growth, prompting several analysts to downgrade the stock.