Reddit and Pinterest stocks plunge due to weak user and revenue growth

Reuters, October 30 - In pre-market trading on Friday, the share prices of Reddit (RDDT.N) and Pinterest (PINS.N) both declined. Previously, Reddit warned that Google's artificial intelligence search feature might lead to a reduction in its user base, while Pinterest forecast that fourth-quarter revenue would be weak.

Reddit's share price plunged 23%, while Pinterest's share price tumbled by 8%.

More details are as follows:

• Reddit stated that, on average, its weekly referral traffic from search engines in October dropped by more than 1 million

• Reddit added that if referral traffic continues to decline, the total daily active unique visitors in the fourth quarter could fall from about 130 million, declining by a low double-digit percentage

• JPMorgan analysts said the expansion of Google's "AI Overviews" and "AI Mode" features, along with algorithm adjustments favoring machine-translated content, together led to the decline in search traffic

• Piper Sandler analysts added that it is reasonable to adjust expectations, and the short-term outlook is becoming increasingly unclear

• Reddit stated in a filing that it has extended its cloud service agreements with Amazon Web Services (AWS) and Google through 2029, committing to pay $880 million and $580 million respectively over three years

• Pinterest’s third-quarter revenue was $1.17 billion, falling short of the LSEG compiled $1.21 billion expectation

• Pinterest expects fourth-quarter revenue to be between $1.425 billion and $1.475 billion, below Wall Street expectations

• RBC analysts said that the adjustment of the EU’s “de minimis exemption” policy hit cross-border sellers earlier and harder than expected, causing Pinterest’s revenue in Europe to stagnate

• As of the close on Thursday, Reddit has fallen about 44% so far this year, while Pinterest has declined about 23%

• If the current loss trend continues, Reddit’s market capitalization will drop by $5.7 billion, and Pinterest’s by about $900 million

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