Reddit Shares Drop Amid Weak Sales Forecast and Plans to Test Mandatory Login Requirement
In the third quarter, Reddit reported revenue of $895 million, but its sales forecast for the next quarter fell short of analysts' expectations.
Reddit plans to test a mandatory login requirement for platform access. Company CEO Steve Huffman shared this with CNBC following the release of the third-quarter 2026 report. The trials will begin in the fourth quarter outside the U.S.
The change may affect the familiar ability to read discussions without registration. However, Reddit has yet to determine which sections and materials will remain accessible to users who are not logged into an account. The company did not specify a timeline for the full implementation of the new rules.
Google Drives Fewer Visitors
According to Huffman, transitions from Google search declined significantly in the third quarter. He attributed this to the development of AI Mode and AI Overviews—features that allow users to receive answers directly within the search interface.
Reddit’s CEO views this as a more serious shift than typical fluctuations following search algorithm updates. The company now intends to focus more on users who access Reddit directly, use the app, and log into their accounts.
For the business, this audience is particularly important: registered users engage more actively with the platform and are more effectively monetized through advertising. Reddit will also continue investing in marketing to offset the decline in search-driven traffic.
Audience Growth Slower Than Expected
Reddit’s average number of daily active unique users grew by 12% year-over-year to 130.3 million. However, analysts had expected 133.7 million. In the U.S., the figure declined by 2% to 50.7 million.
Financial results, meanwhile, exceeded forecasts: quarterly revenue increased by 53% to $895 million, compared to the expected $878 million. Earnings per share were $1.40, against a forecast of $1.35.
Investors were disappointed by the outlook for the next quarter. Reddit forecasts revenue between $1 billion and $1.03 billion, while analysts had anticipated $1.05 billion. Following the results announcement, the company’s shares fell by more than 15% in after-hours trading.
Negotiations with Google Continue
Simultaneously, Reddit is discussing the terms of further data licensing with Google. Huffman stated that the company will only agree to a deal that aligns with its interests.
The other revenue segment, which includes data licensing, brought Reddit $48 million for the quarter—a 35% year-over-year increase. The platform’s largest partners in this area are Google and OpenAI.
