Oct 30 (Reuters) - 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%, while Pinterest slumped 8%.
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% this year and Pinterest about 23% through Thursday's close
• If current losses hold, Reddit is set to lose $5.7 billion in market value and Pinterest about $900 million
(Reporting by Anzar Mehraj in Bengaluru; Editing by Leroy Leo)