Reddit's shares have experienced a significant decline of about 25% in 2025, despite impressive revenue growth attributed to its popularity among advertisers. The company's ad revenue surged 61% year over year in the first quarter 2024. However, Wall Street analysts are expressing concerns over the potential impact of Google's shift to artificial intelligence (AI) in their search algorithms. This change could diminish user traffic to Reddit, which heavily relies on Google Search to attract visitors. While investor sentiment is cautious, there remains optimism for Reddit's future growth prospects.
It's essential for investors to be aware of the challenge these AI models pose to Reddit's business.
Many Reddit users are looking for information on products they're thinking of buying, which is why advertisers continue to increase their spending on the platform.
Reddit's ad revenue grew 61% year over year to $359 million in the first quarter.
Wall Street's mixed opinions stem from Google's shift to AI search summaries, which could reduce user traffic to Reddit.
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