Reddit Did Not Announce Any AI Deals In Its Earnings Report. Its Stock Is Plunging

Reddit's stock fell about 20% on Friday, its largest intraday drop since the company went public.

Yahoo Finance detailed that the drop could largely be explained by the absence of new AI partnerships, something investors were expecting. The company's stock has fallen more than 40% so far this year.

The company's revenue did beat expectations, but U.S. and global daily active users were below expectations.

"These deals aren't binary. They have to make sense for Reddit, but there are many ways, I think, for the value to return to Reddit," company CEO Steve Huffman said during the earnings call.

He also cited "headwinds" in search referrals, saying they were "choppy in the quarter, and traffic was more volatile later in the quarter."

"Our visibility on search continues to remain low, and we expect it to probably continue to be volatile."

The company's had plunged last week on reports that the company was considering not extending a deal with Google to let it use its content to train its AI models.

CNBC recalled that the companies struck the deal in 2024 to allow Google to use Reddit's content to train its AI models. The company got $60 million a year for the deal. It also has a similar deal with OpenAI. The two had helped the company beat estimates last quarter.

However, Reddit is now reconsidering how much the deal is benefiting it because Google's AI summaries have reduced traffic to the website, same as it has happened to many others, including news outlets. The Wall Street Journal noted that Politico's Google traffic has fallen 23% between June 2025 and the same month of this year. CNN's has fallen by 25% and Business Insider's has plummeted 85% in the same period.

In fact, Chegg sued Google in federal court last year, claiming its AI summaries had hurt the company's revenue. Back then, Google told CNBC that the company's search engine "sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites." It gave a similar statement to the WSJ on Wednesday, claiming its AI features help publishers grow their audiences.

A Reddit spokesperson told International Business Times that the company is "approaching these negotiations just like any business should, by focusing on doing what's best for Reddit."

"A lot has changed since those first deals were signed, but our goals are the same: making sure any partnerships drive our business and recognize the unique value of Reddit's data. There is a wide range of ways to do that; those are all things we'll discuss at the negotiating table," the spokesperson added.