Core Insights - The rise of AI chatbots is significantly impacting online media revenue, with Google AI tools reducing traffic to content providers [1][2][3] - Reddit is positioned to potentially benefit from these changes due to its user-generated content and partnerships with Google [4][22] Industry Impact - Online publishers are experiencing a decline in traffic and revenue, leading to staff cuts; for example, Business Insider reduced its workforce by 21% [2][4] - Google's introduction of AI summaries and AI Mode is causing a substantial drop in organic search traffic, with Business Insider's traffic falling by 55% from April 2022 to April 2025 [3][11] - AI Overviews are reducing traffic to websites by 30% to 70%, with 60% of Google searches ending without a click on any links [14][12] Reddit's Position - Reddit's stock has increased by 191% since going public in March 2024, with Q1 2025 revenue rising 61% to $392 million, exceeding expectations [18][24] - Reddit has launched AI-powered marketing tools to enhance advertising effectiveness and is focusing on converting logged-out users to logged-in accounts for better ad revenue [20][22] - Despite its positive outlook, Reddit faces challenges from macroeconomic uncertainty and the complexity of its relationship with Google [21][22] Analyst Perspectives - Analysts are divided on Reddit's future, with some expressing concerns about the high percentage of logged-out users affecting revenue potential; one analyst lowered the price target from $168 to $115 [24][23] - The average price target among 23 Wall Street analysts suggests a 25% upside if Reddit meets expectations [24]
Google AI Mode May Kill Online Media As New Ads Boost Reddit Stock