Reddit, Pinterest shares tumble on weak user and revenue growth

Oct 30 : Shares of Reddit and Pinterest fell in premarket trading on Friday, after Reddit warned that Google's AI search features could shrink its user base, and Pinterest forecast weak fourth-quarter revenue.

Reddit shares tumbled 23 per cent, while Pinterest slumped 8 per cent.

Here are more details:

• Reddit said search engine referrals fell by more than 1 million on average each week in October

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

• JPMorgan analysts said the expansion of Google's AI Overviews and AI Mode, along with changes to how machine-translated content ranks, has pushed search traffic down

• A reset in expectations is appropriate, and the near-term outlook is increasingly clouded, Piper Sandler analysts added

• Reddit said in a filing it had extended its cloud services agreements with Amazon Web Services and Google through 2029, committing to spend $880 million and $580 million, respectively, over three years

• Pinterest's third-quarter revenue of $1.17 billion missed the LSEG-compiled estimate of $1.21 billion

• Pinterest forecast fourth-quarter revenue of $1.425 billion to $1.475 billion, below Wall Street estimates

• RBC analysts said changes to the EU's de minimis exemption hit cross-border sellers sooner and harder than expected, leaving Pinterest's European revenue flat

• Reddit had fallen about 44 per cent this year and Pinterest about 23 per cent through Thursday's close

• If current losses hold, Reddit is set to lose $5.7 billion in market value and Pinterest about $900 million