Reddit, Pinterest shares tumble on weak user and revenue growth

Citizens reduced Reddit's stock rating to Market Perform from Market Outperform, pointing to a slowdown in user growth and fewer visitors arriving via Google searches. The stock is currently at $129.60, down 44% this year and close to its lowest level in 52 weeks, $119.27. Analyst Andrew Boone pointed out that daily active U.S. users dropped 5% quarter-over-quarter.

Reddit's management warned that fourth-quarter daily active users could fall by more than 10%, with Google search referrals falling by over 1 million weekly. Reddit is set to experiment with a logged-in user experience to combat declining traffic from Google. This could make it harder to bring in new users and retain existing ones.

Citizens believes Google's shift towards AI-driven search will further exacerbate the issue of logged-out traffic. While Reddit is successfully monetizing its platform, the uncertainty around user growth puts pressure on revenue. Citizens thinks the stock is fairly valued now, but data from InvestingPro indicates it might be undervalued.

Investors can learn more through Reddit's detailed Pro Research Report. Reddit also reported strong third-quarter 2026 earnings, beating expectations with $1.40 earnings per share and $895 million in revenue. However, the company warned that growth might slow in the fourth quarter due to weaker search traffic and evolving user habits. This has led to a sharp drop in the stock's price after hours.