Reddit Stock Drops 20% After CEO Calls Out Google AI Overviews Despite Beating Earnings

Reddit shares fell more than 20% even after the company reported a 61% year-over-year revenue increase to $804.9 million in Q2 2026 — beating analyst expectations on nearly every line except one CEO Steve Huffman flagged himself: search referral traffic, which he described as "choppy."

Huffman used the earnings call to directly criticize Google's AI Overviews, arguing they summarize publishers' content without returning the traffic benefit traditional search results used to provide: "The 10 blue links have driven a tremendous amount of value for the whole ecosystem, and AI Overviews has yet to make a similar level of positive impact."

The comments landed against the backdrop of Reddit's existing $60 million-a-year content licensing deal with Google, which the company is reportedly reconsidering — a notable tension, since Reddit is simultaneously being paid by Google for its content and watching that same content get summarized in a way that reduces the traffic it used to send back.

Investors' read was straightforward: Google can keep using Reddit's content to answer queries directly while sending fewer readers to actually visit Reddit, which weakens the flywheel — more visitors, more content, more value to license — the market had been pricing Reddit's growth on.

It's a strong showing everywhere except the metric a platform in exactly Reddit's position needs Google's favor for, an uncomfortable position that goes some way toward explaining why the drop outpaced what a genuine earnings beat would normally produce.

Reddit's response — leaning harder on its own app and native search rather than counting on Google referrals — is the playbook most publishers dependent on search traffic are converging toward as AI-summarized answers become the default; the licensing-deal question is the one worth watching next, since walking away from $60M/year is a real signal, not just a negotiating tactic.