Reddit just had a blockbuster quarter. Revenue rose 61% to $805 million. Profit more than doubled. Daily users climbed 18%. Then the stock fell more than 20%. The numbers were not the problem. Google was.
Investors looked past the beat and fixed on one line from CEO Steve Huffman: search referrals had been “choppy.” Reddit’s content sits near the top of countless Google results, so a large share of its visitors arrive through search. If that pipe narrows, the growth story wobbles, however good the quarter looks.
Huffman used the moment to go on the offensive. In a letter to shareholders, he cast Reddit as the antidote to a web drowning in machine-made text. “As the internet becomes flooded with synthetic content, people are craving real human perspective,” he wrote. His sharpest line: “People don’t want a summary of Reddit; they want Reddit.”
On the earnings call, he told Engadget’s readers and investors what he thinks of AI Overviews, Google’s feature that answers queries at the top of the page. The old “10 blue links” drove real value, he said. “From where we sit, AI Overviews has yet to make a similar level of positive impact… we’re still looking for that win-win.”
The $60m question
