Reddit is losing a million search visits a week, so Huffman is locking the door
October's leak finally has a number, more than a million lost search referrals a week, and Steve Huffman's answer is a login wall around 27 billion posts. The cash ledger, $1.2 billion of trailing free cash flow at a 6.8% yield, says the market is paying about 15 times cash flow for a business it expects to shrink.
Vincent Jiang · 3 min read
A million visits a week, gone
Reddit's+2.83% — Reddit, up 2.83 percent today third-quarter call on October 29 finally priced the leak that Google's AI answers opened in its audience 1. Search referrals fell by more than 1 million a week on average in October, CEO Steve Huffman said, and if that pace holds the base of 130.3 million daily active uniques could drop by a low-double-digit percentage this quarter 1.
US daily users had already slipped 2% to 50.7 million, the first American decline since the 2024 IPO 23, even as revenue grew 53% to $895 million 2. Huffman blames Google's+2.43% — Google, up 2.43 percent today AI Overviews and AI Mode: "Web search is evolving from a gateway to the web to becoming an AI-powered destination itself" 5.
The stock fell 29.2% on October 30 and closed 64.6% below its January 13 high 4. The Inference flagged the user wobble before the print; what is new since is the leak rate, the global pledge and the cash ledger 4.
Huffman fences 27 billion posts
His answer is a wall. Reddit begins full tests of a logged-in-only experience in select non-US markets this quarter, and Huffman was blunt on the call: "This is a test, but we are going to make this transition" 6.
The shareholder letter pitches the wall as richer ad-targeting signals, a protected data corpus and regulatory cover 7, and the company says the vast majority of unauthorized access already arrives through logged-out surfaces 8.
The fence guards 27 billion posts and comments, a billion of them added last quarter; asked whether a login screen makes scraping harder, Huffman said "For sure" 6. Google's AI answers now read the harvest without visiting the farm, so Huffman is fencing the field.
The risk inside the mix
The wall converts an audience that behaves like passers-by. More than 80% of monetization already sits with logged-in and app users, COO Jennifer Wong said 6, and first-week retention of new app users rose more than 50% year over year 1.
But Reddit's weekly-to-daily user ratio runs near 4:1 against roughly 2:1 at rivals, which marks much of the audience as transient, there for an answer rather than a daily habit 1. Huffman's own framing is a trade of reach for engagement 6, and he makes no assumption that Google ever sends the traffic back 6.
The cash on the other side
The bear case still has to beat the balance sheet. Trailing free cash flow reached $1.2 billion, more than double the $510 million of a year earlier, on a 91.5% gross margin, with $3.03 billion of cash against $31 million of debt 4. That cash stream equals 6.8% of market value, against 4.3% for the median S&P 500 company: the market pays about 15 times cash flow for a business it expects to shrink 4.
Quarterly free cash flow has quadrupled in eight quarters
Data
| Free cash flow | |
|---|---|
| Q4 '24 | $89.16M |
| Q1 '25 | $126.6M |
| Q2 '25 | $110.83M |
| Q3 '25 | $183.1M |
| Q4 '25 | $263.64M |
| Q1 '26 | $311.16M |
| Q2 '26 | $260.74M |
| Q3 '26 | $362.57M |
February referees the bet
The Q4 guide of $1.00 to $1.03 billion implies 38 to 42% growth, below the Street's $1.05 billion 26.
Three straight quarters of slower growth, and the guide calls a fourth
- Revenue growth, % YoY
- Estimate
Data
| Revenue growth, % YoY | |
|---|---|
| Q4 '24 | 71.3% |
| Q1 '25 | 61.5% |
| Q2 '25 | 77.7% |
| Q3 '25 | 67.9% |
| Q4 '25 | 69.7% |
| Q1 '26 | 69.1% |
| Q2 '26 | 61.1% |
| Q3 '26 | 53% |
| Q4 '26e (estimate) | 40% (38–42%) |
The February 2027 report carries the two numbers that settle the argument: daily uniques near or far from 130 million, and free cash flow against its year-ago quarter 4. Huffman is betting a smaller, logged-in Reddit earns more from each visitor than an open one ever did, and the logged-out Googler who loses the corpus is the one paying for the experiment.
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