Shares of Reddit Inc (RDDT  ) tanked in early trading on Friday, despite the companyThursday reporting strong third-quarter revenue growth.

Here are some key analyst takeaways:

  • KeyBanc Capital Markets analyst Justin Patterson downgraded the rating from Overweight to Sector Weight.
  • Guggenheim Securities analyst Michael Morris reiterated a Buy rating, while slashing the price target from $255 to $170.
  • Cantor Fitzgerald analyst Deepak Mathivanan maintained a Neutral rating, while reducing the price target from $170 to $120.
  • Needham analyst Laura Martin reaffirmed a Buy rating, while lowering the price target from $300 to $150.
  • JPMorgan analyst Doug Anmuth maintained a Neutral rating, while cutting the price target from $185 to $150.

KeyBanc Capital Markets: Reddit's revenues grew 53% year-on-year to $895 million, coming in around 2% above Street expectations, Patterson said in his downgrade note. EBITDA of $402 million exceeded consensus of $400 million, he added.

The analyst noted, however, that DAUq (daily active unique) remained sequentially flat at 130 million, missing consensus of 134 million. "Search traffic is a larger headwind than envisioned, and this creates more uncertainty around '27E/'28E revenue and EBITDA," he further wrote.

Guggenheim Securities: Reddit delivered another strong quarter, with revenue and adjusted EBITDA ahead of guidance, Morris said. The stock came under pressure as the company's fourth-quarter guidance modestly missed Street expectations and search referral declines accelerated, he added.

Management indicated that October search referrals declined by more than 1 million per week on average, and that total DAUq could contracted by a low double-digit percentage in the fourth quarter, the analyst stated.

"Overall, we remain bullish on the logged-in user base and ad revenue growth potential, but see investor caution around referral traffic pressure, the logged-in transition and a potential ARPU ceiling on a smaller user base," he further wrote.

Cantor Fitzgerald: WhileReddit's revenues were ahead of estimates, the magnitude of the beat was modest versus the past several quarters, Mathivanan said. Daily active users (DAUs) missed Street expectations by 3 million, with intensifying search referral headwinds, he added.

The company plans to test a primarily logged-in experience in certain markets during the fourth quarter, which could trigger greater volatility in user metrics, the analyst noted.

The deceleration in Reddit's revenue trajectory in the back half of 2027 "is likely to resurface debates on runway for monetization growth," he further wrote.

Needham: Reddit outperformed on "every financial metric" in the third quarter, Martin said. She added, however, that the stock came under pressure due to:

  • Management indicating that average search traffic fell by more than 1 million referrals per week.
  • Plans to focus only on logged-in and app users, which drove more than 80% of third-quarter revenues.
"One negative read-through of 3Q26 commentary (to us) is that RDDT will not renew its Gemini LLM deal- an investment negative," the analyst further wrote.

JPMorgan: Search traffic headwinds continue to weigh on Reddit's DAUq trends, Anmuth said.

The expansion of Alphabet Inc's (GOOG  ) AI Overviews and AI Mode, along with ranking changes in machine-translated content, drove Reddit's search traffic significantly lower in the third quarter and tends worsened as the quarter progressed, the analyst stated.

The company's plans to shift to a logged-in-only experience, which is "an important step" in reducing its dependence on Google Search and improving personalization for users, he added.

The transition could take time, as Reddit plans to test in select international markets in the fourth quarter "before scaling the experience more broadly," Anmuth further wrote.

RDDT Price Action: Shares of Reddit had declined by 29.31% to $91.62 at the time of publication on Friday.