RDDT Stock Plunges on Google Search and AI Overviews Dependence

On February 12, 2025, Reddit reported Q4 2024 results that beat on revenue and earnings but missed on its key user metric. Global daily active unique visitors rose 39 percent year over year to 101.7 million, but that fell short of Wall Street's estimate of roughly 103 million. Revenue jumped 71 percent to $427.7 million, yet the user miss dominated the market reaction.

CEO Steve Huffman attributed the user-growth shortfall to a Google search algorithm change late in Q4 that reduced how frequently Reddit appeared in Google search results. Analysts tied this in part to Google's growing emphasis on AI-generated summaries, AI Overviews, that answer queries directly on the search results page before users click through to sites like Reddit. Reddit relies on Google for a large share of its traffic.

The stock fell sharply on the news, dropping roughly 13 to 15 percent in after-hours and premarket trading, and continued sliding over the following weeks, losing roughly 19 to 23 percent across February 2025. The 'logged-out user' dynamic is central to this volatility: logged-out visitors, who largely arrive via Google search, are far more sensitive to algorithm changes than Reddit's logged-in core users.

The pattern recurred into 2026, with further multi-day stock slides tied to AI search tools eroding referral traffic, making the episode a defining example of AI search threatening traffic-dependent web businesses.