AI Search Impact and Weak Outlook Drag Down Reddit and Pinterest

Reddit shares plummeted 23% in premarket trading on Friday following a warning from the company that Google’s expanding use of AI in search is reducing referral traffic and threatening its user growth. The social media platform projected that total daily active unique visitors could drop by a low double-digit percentage from 130 million in the fourth quarter if traffic declines persist. Analysts noted that features like Google’s AI Overviews, alongside search ranking updates for translated content, have severely impacted traditional referral flows, clouding Reddit’s near-term outlook despite recent extensions to its cloud service agreements with Amazon and Google.

Pinterest also took a hit, with its stock sliding 7.28% after reporting third-quarter revenue of $1.17 billion that fell short of Wall Street’s $1.21 billion estimate. The visual discovery platform issued a disappointing fourth-quarter revenue forecast of $1.425 billion to $1.475 billion, driven primarily by a pullback among cross-border sellers in Europe. RBC analysts highlighted that recent regulatory adjustments to the European Union’s de minimis tax exemption impacted international vendors earlier and more aggressively than anticipated, leaving Pinterest’s European revenue stagnant for the quarter.

The premarket sell-off deepens significant losses for both social network companies, which had already fallen 44% and 23% respectively through Thursday’s close. If the premarket trends hold through normal trading hours, Reddit is positioned to wipe out roughly $5.7 billion in market capitalization, while Pinterest stands to lose over $800 million. The combined market reaction underscores growing investor concern over how rapid shifts in search engine architecture and international trade policy are disrupting traditional revenue and traffic models across digital platforms.

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