How bad is indexing search results on Google?

So long story short I've been living a frustrating few months.

My SEO spiked to 7k - 15k daily impressions which was great and that lasted for a month, then it started declining... it's now reached a daily of 500 - 800 impressions max and of course a decline in clicks.

I've audited our website in many tools, did so much investigations and optimized everything. I still can't find why we're facing this decline.

Now I'm starting to think it's because of the way our 404 pages work? If you reach a 404 page it will automatically redirect to a search result. For example, you landed on zayoom-dot-com/packs and let's say that's a 404 page - it will automatically land you to a search result for "packs" in hopes that you'd find it there.

Question is: I know Google doesn't like indexing links that take people to search results but can it be the reason I've had this massive decline in traffic?

Any help is SuUupPeR appreciated!!1