TLDR
- Reddit (RDDT) stock was down about 22% in premarket trading Friday, near $100, after closing Thursday at $129.60.
- Q3 adjusted earnings of $1.40 and revenue of $895 million beat estimates.
- Daily active users of 130.3 million missed the 134 million estimate, and U.S. users fell 2%.
- Q4 revenue guidance of $1.00 billion to $1.03 billion has a midpoint below Wall Street’s $1.05 billion estimate.
- Search referrals fell by more than 1 million a week in October, and Reddit warned users could drop by a low double-digit percentage in Q4.
Reddit (RDDT) stock was down about 22% in premarket trading Friday, near $100. It closed Thursday at $129.60, down 4%.
The drop followed third-quarter results that beat on earnings but missed on user growth and guidance. Investors clearly cared more about the second part.
Adjusted earnings came in at $1.40, above the $1.33 estimate. Revenue rose 53% to $895 million, ahead of the roughly $875 million analysts expected.
Users and Search Traffic Raise Concerns
Daily active users reached 130.3 million, up 12% from a year ago. Analysts were looking for 134 million, according to FactSet.
REDDIT $RDDT Q3’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $895M (Est. $878.4M) 🟢; +53% YoY
🔹 EPS: $1.40 (Est. $1.35) 🟢; +75% YoY
🔹 Adj. EBITDA: $402M (Est. $399M) 🟢; +70% YoYUsers (Q3):
🔹 DAUq: 130.3M (Est. 133.4M) 🔴; +12% YoY
🔹 WAUq: 515.2M (Est. 531.1M) 🔴; +16% YoY
🔹… pic.twitter.com/3USlgqgf3v— Wall St Engine (@wallstengine) October 29, 2026
U.S. daily active users fell 2%. International users grew 24%.
The bigger worry is search traffic. CEO Steve Huffman said referrals from search fell by more than 1 million a week on average in October.
If that pace holds, daily active users could fall by a low double-digit percentage in the fourth quarter from the current base of about 130 million. Huffman added on the call that search referral trends “do not determine our relevancy.”
Google’s AI Overviews are a big part of this story. Users increasingly read the AI summary instead of clicking links, and Reddit was often cited in those lists.
Huffman said Reddit will focus on logged-in and app users, who make up more than 80% of its monetization. The company will also test a mostly logged-in experience in select markets outside the U.S. in the fourth quarter.
Ads Strong, Guidance Light
Advertising revenue rose 54% to $847 million, beating the $830 million estimate. Ads are still the main money maker, and that part held up fine.
Net income rose 74% to $283 million, a 32% margin. Adjusted EBITDA climbed 70% to $402 million.
Fourth-quarter revenue guidance of $1.00 billion to $1.03 billion has a midpoint of $1.015 billion. Wall Street was looking for $1.05 billion.
Weekly active uniques grew 16% to 515.2 million. Huffman also pointed out that revenue has topped $3 billion over the past 12 months.
Some investors wanted news on AI data licensing. Alphabet (GOOGL) and OpenAI are estimated to pay $60 million to $70 million each per year for Reddit content, and both deals are up for renewal.
Reddit gave no update on those talks in its report. The stock was already down 41% this year before Friday’s move.
Reddit forecast fourth-quarter adjusted EBITDA of $480 million to $510 million. It also bought back $100 million of its stock in the third quarter.
A company spokesperson told Barron’s on Thursday that licensing negotiations are still happening.
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