It doesn’t take a market expert to realize that Reddit (RDDT) has suffered a severe setback. Following its second-quarter earnings disclosure — where a dark cloud surrounding Google’s AI search threatening user traffic and growth trends dominated proceedings — investors had to digest escalating concerns tied to machine intelligence’s disruptive potential. Subsequently, RDDT stock dropped 21% last Friday.
As Barchart contributor StockStory mentioned, the “main concern for investors was uncertainty around how users will find Reddit as Google increasingly uses AI-generated summaries instead of traditional search links. This change threatens Reddit's referral traffic, a key source of its audience. The issue was highlighted by slowing domestic daily active user growth of 5.8% and CEO Steve Huffman's comment that search referrals had become ‘choppy’ during the quarter.”
