Google's AI Overviews Lowered Reddit's Traffic. Its Stock Dropped 29%

Reddit's stock plunged 29.22% on Friday, reports CNBC, its worst drop since becoming a public company in 2024. Thursday Reddit reported a sales growth that was weaker than previous quarters, and also forecast weak sales for the quarter to come (below analysts expectations): 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... 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 login requirement switch "puts more pressure on user monetization." Reddit's CEO also said that forcing users to login will help the company's advertising business. "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." "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."

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