Steve Huffman warns of Google search volatility as Reddit shares experience significant intraday drop
Reddit shares plummeted 23% during midday trading on Friday, marking the stock's worst intraday drop since its 2024 IPO. Despite reporting strong Q2 2026 revenue of $805 million—a 61% year-over-year increase—and beating earnings expectations, the market reacted negatively to warnings from CEO Steve Huffman regarding the impact of Google's AI-powered summaries. Huffman noted that Google's AI Overviews have created uncertainty regarding search-derived traffic, which has historically been a primary driver for the platform. While Reddit's advertising revenue continues to grow at a rate of over 60% for eight consecutive quarters, the company faces a premium valuation compared to peers like Meta Platforms. Investors are currently weighing whether Reddit's robust monetization and human-led discussion model can sustain its high price multiple as it works to convert more web traffic into direct users. The company remains a low-spend platform, aiming to deliver AI returns without the heavy capital expenditures seen by its hyperscaler peers.