Reddit Inc. shares fell roughly 19% to 22% in Friday premarket trading, to around $102 to $105, after the social platform's fourth-quarter revenue forecast came in below Wall Street expectations and its chief executive flagged declining referral traffic. The move came even as the company reported another quarter of rapid growth.
For the third quarter ended Sept. 30, revenue climbed 53% year over year to $895 million, gross margin was 91.5%, and net income reached $283 million, a 32% net margin. Operating cash flow was $364 million, or 41% of revenue, up 96% from a year earlier. Daily active uniques rose 12% to 130.3 million and weekly active uniques increased 16% to 515.2 million, according to the company's earnings release.
The disappointment centered on guidance. Reddit expects fourth-quarter sales of $1.00 billion to $1.03 billion, while the LSEG consensus called for $1.05 billion, CNBC reported. At the midpoint, the guidance still implies sequential revenue growth of roughly 13% from the third quarter's $895 million. After the close Thursday, the stock initially dropped about 18% in extended trading before extending losses in the premarket session.
Chief executive Steve Huffman flagged declining referral traffic and outlined plans to shift toward a logged-in-only platform experience, TradingView reported. The comments underscore a risk that has weighed on the stock all year: dependence on search referrals. After the second-quarter report, Reddit shares fell as management described search referrals as choppy, and the stock was down 34% for 2026 at that point, according to TIKR.
The shareholder letter highlighted engagement among the most valuable users. Logged-in and app daily active uniques, described as the most engaged and monetizable, grew quarter over quarter in both the U.S. and the rest of the world. Reddit also repurchased about 670 thousand shares during the quarter for $100 million at an average price of $149.81, well above where the stock is indicated this morning, and noted its inclusion in the S&P 500 index.
Competing narratives will drive trading. Bulls point to 53% revenue growth, 41% cash-flow margins and a still-expanding user base; bears focus on whether weaker search referrals, AI-driven changes in how people discover content, and a shift toward logged-in users will slow user growth and ad inventory in 2027. Huffman said in the prior quarter that AI-generated search summaries had yet to deliver the same positive impact as traditional search links, according to coverage of that call.
Volatility is not new for the shares. Reddit's 52-week high was $283, according to TIKR, so the indicated price near $105 sits more than 60% below that peak.
Traders should watch whether the premarket low holds near $100, how analysts adjust 2027 revenue models, and whether the selloff drags other ad-supported internet names, several of which also reported weak outlooks this week. Month-end flows and a Friday session in a risk-off tape could amplify moves in either direction.