Google continues to actively index Reddit but no longer directs users there. On Friday, Reddit lost over $7 billion in market capitalization — shares plummeted 29% to $91.73, marking the company's worst day in history.
Reddit was not alone. Publishers, travel sites, and photo platforms are recording a synchronized decline in traffic from Google. This is no longer an isolated glitch but a structural shift in the economics of search.
What Google Did
Google increasingly serves answers to queries directly on its own platform — through AI summaries and a special mode based on artificial intelligence. Users click through links less often, meaning sites lose valuable organic traffic.
"Google indexes us as actively as before," Reddit CEO Steve Huffman said on October 29. According to him, in October Reddit received 1 million fewer visits per week through search. "In practice, the AI-based mode does not lead to traffic growth," he added.
Reddit warns that average daily audience may shrink by a double-digit percentage this quarter — that is at least 13 million fewer users daily. Despite this, revenue grew 53% — to $895 million.
Alphabet, Google's parent company, lost about $500 billion in market capitalization on Thursday amid a stock plunge following its earnings report. Growth in its search business slowed to 12%.
Who Else Depends on Google Clicks
People Inc. (PPLI), publisher of People magazine, lost 40% of its search traffic from Google over the year. Tripadvisor (TRIP) CEO Matt Goldberg said AI overviews are leading to a decline in casual visitors. Pinterest (PINS) warns that search traffic is beyond its control, and shares fell nearly 8% on Friday after a weak earnings report.
Homework help service Chegg sued Google over summaries generated by artificial intelligence. Chegg shares have plummeted from $113 to about $1 since 2021.
Reddit May Repeat Chegg's Fate
Reddit's main advantage is its loyal users. COO Jen Wong said that over 80% of the platform's revenue comes from registered users and those using the mobile app.
Reddit posts are also used to train artificial intelligence. Analyst Bull Theory claims that AI uses approximately 40% of answers from Reddit threads. Google and OpenAI pay about $60 million and $70 million per year respectively to license this data, and the agreement with Google is set to expire soon.
Even after the decline, Reddit trades at a multiple of 19 times expected earnings — for Snap this figure is 7.5. The number of users this quarter will show whether loyal participants can compensate for the loss of clicks from Google.
Cryptalist Analysis: The market is repricing not an individual company but the entire model of "search traffic = monetization" on which the open web was built. Google's shift to AI answers redistributes value in favor of model owners and data licensors, leaving content aggregators in the role of raw material suppliers. For investors, this is a signal: the resilience of media and platform assets is now determined not by audience reach from search but by the share of direct and registered traffic.