Reddit just showed what AI is doing to the internet. It lost over $7 BILLION in a day after warning Google's AI is cutting its traffic. Its stock closed down 29.2% on Friday, its worst day ever, and is now down 41% in eight straight sessions. The reason came out on its earnings call. CEO Steve Huffman said Google's bots are still reading Reddit's pages as much as ever. But instead of sending people to Reddit, Google's AI Mode now answers their questions directly. He said AI Mode doesn't drive traffic to Reddit, or to anyone else as far as he knows. Reddit lost over 1 MILLION visits a week from search in October. It now warns its daily users could fall by a low double digit percentage this quarter if the decline continues. And it isn't just Reddit. Chegg has lost over 99% of its value since 2021. Stack Overflow's monthly questions fell from over 200,000 at their peak to just 3,862 last December. For over 25 years, Google was how people found the rest of the internet, and that era may now be ending.

Reddit $RDDT showed a massive -$4.3M in net premium into Oct. 30, with the premium ratio collapsing to 0.04. That came alongside an earnings miss, with RDDT now down about 25% as the market reprices the print.

Reddit's earnings call has exposed the new reality for thousands of companies. "AI mode does not drive traffic. Not for us and not to anybody as far as I know. It used to be a traffic driver. Now it's not." - Reddit CEO. The reality is that AI is fundamentally changing the way that humans access the internet. Just 24 hours prior to this statement, Google's stock erased -$480 billion on the same issue: AI is disrupting the traditional search model. For decades, the internet operated on a simple model. Search engines directed users to websites, and those websites monetized the traffic. AI is destroying this business model, and it's happening at an accelerating pace. The traditional model of internet traffic is rapidly becoming outdated. The internet has entered a new era.

Reddit stock got absolutely crushed, dropping 21.84% to $101.50 after its Q4 outlook disappointed investors. And this happened despite a pretty strong Q3: > Revenue hit $895 million, up 53% year-over-year. >Net income jumped 74% to $283 million. EPS reached $1.40, beating expectations of $1.33. Reddit says search referrals have been declining, partly due to Google’s AI-powered search changes. CEO Steve Huffman also warned that daily active users could fall by a low double-digit percentage in Q4 if the trend continues.