Shares of Reddit cratered 29.22% on Friday, the worst drop since becoming a public company in 2024, after the company forecast weak fourth-quarter sales in its latest earnings report. The previous record low was set on July 31, when the stock dropped 20.99%.

The social media company on Thursday projected fourth-quarter sales between $1 billion and $1.03 billion, below analysts' estimates of $1.05 billion. Reddit reported Q3 sales growth of 53% over a year ago, weaker than previous quarters, but beat Wall Street expectations on both earnings and revenue.

The report comes as the company has seen a shift in its search referral traffic with the rise of Google's AI Overview. In an interview with CNBC, Reddit CEO Steve Huffman said search-referral traffic from Google went "down meaningfully in this quarter" due to AI.

Reddit announced on Thursday that it plans to test requiring users to "Reddit is the last platform to provide basically unfettered logged-out access, and that's largely because of me. I've been holding that line," Huffman said. "I think users will probably go through the same understanding that I have, which is that it's a sign of the times. It's an evolution of how these platforms work."

Multiple analysts downgraded the stock following Reddit's disappointing results, with Citizens noting that "search changes highlight the problem with selling content to Google" and that as referral problems worsen, uncertainty around user growth amid the requirement switch "puts more pressure on user monetization.