Reddit Stock Forecast: RDDT Drops 23% Premarket as Google AI Traffic Warning Overshadows a Q3 Beat

TradingKey - Reddit (NYSE: RDDT) fell to $99.95 in premarket trading, down about 23%, after its third-quarter report on Thursday, October 29. The stock had already dropped 3.79% to $129.60 in the regular session, and the premarket price sits well below its 52-week low of $119.27.

Revenue grew 53% and beat estimates. Investors sold anyway because Reddit warned that Google's AI search features are sending it fewer visitors, and that its daily users could fall sharply in Q4 if that continues.

Q3 Revenue Beat and Profit Jumped

Revenue rose 53% to $895 million, above the $878.4 million LSEG estimate. Advertising revenue grew 54% to $847 million, and other revenue, which includes data licensing, rose 35% to $48 million. EPS climbed to $1.40 from $0.80, and adjusted EBITDA, a measure of operating profit that leaves out items such as depreciation and stock-based pay, rose 70% to $402 million, a 45% margin.

Free cash flow nearly doubled to $363 million, and Reddit bought back $100 million of stock at an average of $149.81 a share. Revenue over the last 12 months passed $3 billion, and CFO Drew Vollero called $5 billion the company's "internal north star."

US Users Fell as International Users Grew

Daily active uniques, the number of unique visitors each day, rose 12% to 130.3 million. But US users fell 2% to 50.7 million, while international users rose 24% to 79.6 million. Average revenue per user still climbed 36% to $6.87, so Reddit is earning more from each visitor even as US traffic slips.

Google's AI Search Is Cutting Traffic

CEO Steve Huffman said search engine referrals fell by more than 1 million on average each week in October. "Google is crawling us as hard as ever," he said, but "the AI mode does not drive traffic, not for us and not to anybody." If referrals keep falling, Huffman warned that total daily users could drop by a low double-digit percentage in Q4 from about 130 million.

That is the other side of Alphabet's report on Wednesday, when Google said search queries grew at their fastest pace in five years. Huffman's comments suggest Google's AI answers now keep more of that traffic on Google instead of sending it to sites like Reddit.

The Logged-In Bet

Reddit plans to test a logged-in-only version in select markets outside the US in Q4. Logged-in daily users grew 7% to 53.5 million, and together with app users they account for more than 80% of monetization. Requiring sign-ins also makes it harder for AI companies to scrape Reddit's content. Huffman said Reddit will keep licensing its data, but with "guardrails." The risk is that a login wall pushes away casual visitors before they become account holders.

Q4 Guidance

For Q4, Reddit guided revenue to $1.00 billion to $1.03 billion, largely in line with estimates, according to Reuters. Adjusted EBITDA should reach $480 million to $510 million, below the $512.2 million LSEG estimate. The next tests are the weekly search referral trend and early results from the login test.

Reddit Technical Analysis: Gap Below $108.27 Keeps RDDT Under Pressure

The premarket drop shows up as a deep gap on the daily chart. RDDT had already broken below a triangle, a narrowing price pattern, and $134.14 support this week. If the gap holds, price will cut through every support down to $108.27 in one move and sit far below the 50-day and 100-day EMAs, moving averages that give more weight to recent prices.

RSI, a momentum gauge that runs from 0 to 100, was near 31 at Thursday's close, just above 30, the oversold line, and the MACD, a trend-following momentum indicator, is falling. A gap this large would likely push RSI deep into oversold territory, which can lead to a brief bounce.

RDDT Price Chart - Source: Tradingview

For buyers, a move back above $108.27 would be the first sign of relief. The bigger hurdle is $124.06, because broken support often turns into resistance. On the downside, the chart shows no clear support below the gap, so the round $100 level is the first area to watch.

I'm bearish while RDDT stays below $124.06, though an oversold bounce is possible after such a large gap.

Key Levels

• Last close: $129.60, down 3.79% on October 29 (premarket: $99.95)
• Support: $100
• Resistance: $108.27, $115.89, $124.06, $134.14
• RSI: 30.90, just above the 30 oversold line
• Bullish trigger: Daily close above $124.06
• Bearish trigger: Daily close below $100

FAQs

Why did Reddit stock fall after earnings?

Reddit dropped about 23% premarket after warning that Google's AI search is cutting referrals by more than 1 million a week and that daily users could fall by a low double-digit percentage in Q4, even though Q3 revenue rose 53% and beat estimates.

What is the Reddit stock forecast now?

The bias is bearish below $124.06 on the daily chart. A move back above $108.27 would be the first sign of relief, while a daily close below $100 would extend the selloff.

Bottom Line

Reddit is still growing revenue fast, but its audience now depends on how much traffic Google sends, and that number is falling. The level that matters is $108.27, the first resistance above the gap. In my view, RDDT stays under pressure below $124.06, and a move back above $108.27 would be the first sign that buyers are returning.