Reddit reports a solid quarter but shows signs of AI’s impact
Reddit's financial situation is looking good but uncertainty about its relationship to Google and the new AI-ified web are stirring market concerns.
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Reddit reported strong quarterly financial results that beat expectations, but its stock fell sharply after the CEO warned that search engine traffic had become "choppy" during the quarter. The decline reflects investor concerns that artificial intelligence is changing how people find information online, potentially reducing traffic to Reddit from search engines. In 2024, Reddit signed a deal to provide its content to a major search company for AI training, but that same search company's AI summaries appear to be directing users away from Reddit instead. Investors worry that as search increasingly relies on AI summaries rather than directing people to original sources, Reddit's ability to attract new users and grow its audience will suffer.
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