Steve Huffman expresses concerns over Google's AI Overviews as Reddit shares fall despite strong earnings
Reddit reported second-quarter earnings that exceeded Wall Street expectations, with revenue climbing 72% year-over-year to $500 million. Despite these strong financial results, shares of the company fell significantly, ranging from 7% to 23% depending on the report, due to investor concerns regarding the impact of Google's AI Overviews. CEO Steve Huffman noted that while the commercial business remains strong, search referrals from Google have become "choppy" and volatile. Huffman argued that AI Overviews have yet to provide a "win-win" for the platform, as the summaries often answer questions before users click through to the site. This has led Reddit to consider renegotiating or even ending its lucrative licensing deal with Google. While the company's advertising business continues to expand, particularly from small and medium-sized businesses, the slowdown in growth among high-value U.S. users remains a concern. Management plans to phase out reporting logged-in and logged-out user figures to provide more clarity on future engagement metrics.