"Reddit Answers" uses generative AI to answer questions using what past Reddittors have posted. Announced in December, Reddit now plans to integrate it into their search results, reports TechCrunch, with Reddit's CEO saying the idea has "incredible monetization potential."

And yet Reddit's stock fell 14% this week. CNBC's headline? "Reddit shares plunge after Google algorithm change contributes to miss in user numbers."

A Google search algorithm change caused some "volatility" with user growth in the fourth quarter, but the company's search-related traffic has since recovered in the first quarter, Reddit CEO Steve Huffman said in a letter to shareholders. "What happened wasn't unusual — referrals from search fluctuate from time to time, and they primarily affect logged-out users," Huffman wrote. "Our teams have navigated numerous algorithm updates and did an excellent job adapting to these latest changes effectively...." Reddit has said it is working to convince logged-out users to create accounts as logged-in users, which are more lucrative for its business.

As Yahoo Finance once pointed out, Reddit knew this day would come, acknowledging in its IPO filing that "changes in internet search engine algorithms and dynamics could have a negative impact on traffic for our website and, ultimately, our business." And in the last three months of 2024 Reddit's daily active users dropped, Yahoo Finance reported this week. But logged-in users increased by 400,000 — while logged-out users dropped by 600,000 (their first drop in almost two years).

Marketwatch notes that analyst Josh Beck sees this as a buying opportunity for Reddit's stock:
Beck pointed to comments from Reddit's management regarding a sharp recovery in daily active unique users. That was likely driven by Google benefiting from deeper Reddit crawling, by the platform uncollapsing comments in search results and by a potential benefit from spam-reduction algorithm updates, according to the analyst. "While the report did not clear our anticipated bar, we walk away encouraged by international upside," he wrote.

[ Read more of this story ]( https://tech.slashdot.org/story/25/02/16/007234/despite-plans-for-ai-powered-search-reddits-stock-fell-14-thsi-week?utm_source=atom1.0moreanon&utm_medium=feed ) at Slashdot.