Reddit Plummets 23% Amid Google Search Referral Woes

Reddit's stock plummeted 23% to $136.32 on Friday, its worst intraday drop since its 2024 IPO, while Alphabet's shares rose 6% to $352.45.

The divergence between the two social media companies' stocks is striking, as both are classified under the same sector proxy. Meta Platforms shares were up less than 1%, and Snap stock fell by 2%.

Despite beating Q2 estimates with $805 million in revenue, a 61% year-over-year increase, Reddit's stock price was dragged down by CEO Steve Huffman's warning that Google search referrals had become 'choppy' and traffic more volatile later in the quarter.

Huffman noted that in an increasingly automated web, real human perspective has never been more valuable. However, investors seemed to focus on the near-term traffic risk rather than the long-term implications.