Reddit Shares Plunge 25% as AI Disrupts Traditional Website Traffic Model

Reddit shares plunged around 25% on Friday as concerns over declining website traffic and a weaker outlook overshadowed the company's earnings, highlighting the growing challenge artificial intelligence poses to the internet's traditional traffic model. According to information shared by Coin Bureau, Reddit's search referrals fell by more than 1 million per week on average in October.

Reddit CEO Steve Huffman addressed the issue during the company's earnings call, saying that AI-powered search experiences were not generating traffic for Reddit or, to his knowledge, for other websites. His comments underscore concerns about how the growing use of AI in search could affect publishers and online platforms that depend on visitors arriving through search engines.

Reddit CEO Says AI Search Does Not Drive Traffic

During the earnings call, Huffman stated: “AI mode does not drive traffic. Not for us and not to anybody as far as I know.” The remark points to a potential gap between the way people use AI-powered search tools to find information and the number of visits those tools send to the websites that provide it.

The reported decline in Reddit's search referrals provides a numerical measure of the pressure facing the platform. Search referrals dropped by more than 1 million per week on average in October, according to the information shared by Coin Bureau. The report did not specify the total number of search referrals Reddit received or identify how much of the decline was directly attributable to AI-powered search.

Reddit's stock markets reaction was sharp. Shares of the company, which trades under the ticker RDDT, fell around 25% on Friday as investors weighed traffic concerns and a weaker outlook against the company's earnings results.

The Internet's Traditional Traffic Model Faces Pressure

For decades, much of the internet's commercial model relied on a relatively straightforward exchange: websites produced content, search engines directed users to that content, and the resulting visits helped generate revenue through advertising, subscriptions and sales.

That arrangement connected the creation of online information with the distribution of audiences. Publishers and platforms could attract visitors through search results, then seek to monetize those visits through advertising placements, paid memberships or purchases.

AI-powered search experiences raise questions about how that relationship may change. If users can obtain answers directly through AI interfaces without visiting the original websites, those websites may receive fewer referrals even when their content helps inform the answers. The comments attributed to Huffman reflect the concern that AI search is not currently replacing traditional search referrals with an equivalent flow of visitors.

However, the information shared by Coin Bureau does not establish that AI alone caused Reddit's referral decline or quantify the impact on the company's revenue. It reports the decrease in weekly search referrals, Huffman's comments on AI-driven traffic and the market reaction to Reddit's earnings and outlook.

Why the Traffic Shift Matters

Reddit's experience illustrates the potential challenge for internet businesses whose commercial models depend partly on attracting users from external search engines. A change in how people discover information can affect the flow of visitors that supports advertising, subscriptions and sales, even when a platform continues to produce content.

The immediate market response was reflected in RDDT shares, which fell around 25% on Friday amid concerns about traffic and the company's weaker outlook. Huffman's assessment was direct: “AI mode does not drive traffic. Not for us and not to anybody as far as I know.”

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.

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