Reddit (RDDT) built its empire on curiosity, with users landing on threads through random searches, diving into unfiltered opinions and rabbit-hole conversations. But that traffic lifeline is now under siege. More than half of Reddit’s users browse while logged out, meaning their visits often start with Alphabet's Google (GOOGL). That is where the game is changing.

Google’s artificial Intelligence (AI)-powered search is evolving fast, and the ripple effect could hit content platforms hard. As Google leans further into generative AI search results, platforms like Reddit, which rely heavily on search-driven traffic, face a growing threat. With AI potentially reducing the need to click through to Reddit, analysts are sounding the alarm. 

Wells Fargo’s Ken Gawrelski downgraded RDDT stock to “Equal Weight” and slashed the price target to $115, citing slowing user growth. He further warned that even Reddit’s new AI tools won’t offset the drop in logged-out traffic. With Google’s AI reshaping search, Reddit’s growth story is facing serious headwinds.

About Reddit Stock

With a market cap of $19.3 billion, Reddit is a platform built for curiosity - connecting users through shared interests, niche passions, and real conversations. From sharing stories and memes to diving deep into hobbies or trading tips, Reddit turns internet strangers into community regulars. 

Recession fears, tariff noise, and weakening demand have hit Reddit in 2025. RDDT stock is down nearly 40% on a YTD basis and has plunged over 50% from its peak.

Reddit Tops Q1 Estimates

Reddit came in swinging with its Q1 2025 earnings on May 1, beating expectations across the board. Revenue soared 61% year over year to $392.4 million, and EPS flipped to a $0.13 from a brutal $8.19 per-share loss in the year-ago quarter, crushing the $0.02 consensus.

Daily active users hit 108.1 million, up 31%, but the pace cooled compared to the annual growth in Q4 2024, raising some red flags. Ad revenue, Reddit’s bread and butter, also climbed 61% to $358.6 million.

Gross margins ticked up to an impressive 90.5%, signaling better efficiency. The adjusted EBITDA margin reached 29.4%, up from 4.1% in the year-ago quarter. Operating cash flow soared to $127.6 million, and free cash flow hit $126.6 million, up big from last year’s numbers. Cash reserves now sit at a healthy $635.7 million. 

Following the results, CEO Steve Huffman addressed the growing AI disruption head-on. He acknowledged that large language models from players like OpenAI and Perplexity are changing how people search, offering clean, AI-summarized answers. But Reddit, he argued, thrives in the chaos. Its strength lies in raw, human perspectives.

Reddit Answers, the platform’s ChatGPT-style tool, has already hit 1 million weekly active users. Huffman believes that while some may prefer sterile AI summaries, Reddit’s messy, real conversations offer something AI can’t replicate. Backing that confidence, Reddit issued upbeat Q2 guidance, projecting revenues between $410 million and $430 million, and adjusted EBITDA is anticipated to land somewhere between $110 million and $130 million.

Analysts tracking Reddit predict its Q2 EPS to surge by 416.7% year over year to $0.19. Meanwhile, looking ahead, its profit for fiscal 2025 is estimated to climb by 136.3% annually to $1.21 per share, and rise by another 80.2% to $2.18 in fiscal 2026.

Are Google’s AI Search Innovations Leaving Reddit Behind?

Google's new AI Mode now answers queries with layered, cited summaries. Project Astra adds visual intelligence; point your camera, get smart results. Mariner’s digital agents hunt down deals, book tables, and even help you shop smarter with AI-fueled try-ons.

For Reddit, that is a creeping threat. Its lifeblood has always been visibility - those random users landing on threads after Googling questions. But as Google’s AI grows bolder, it is starting to answer those questions itself, up front, with no need to click deeper.

Reddit becomes the source, not the destination. And that is a problem. With over half its users browsing while logged out, fewer eyes mean fewer ad dollars. Even Reddit’s effort to bolster direct engagement with its own AI features may not stop the bleed. As Google takes center stage in search, Reddit risks being pushed to the sidelines.

What Do Analysts Expect for Reddit Stock?

Reddit may be on solid footing, but cracks are starting to show in Wall Street’s confidence. After a strong post-IPO run, some analysts are stepping back.

As Alphabet rolls out AI-powered search, Wells Fargo slashed Reddit’s price target from $168 to $115 and cut its rating to an “Equal Weight” from an “Overweight.” The concern is that AI search may be rewiring user habits permanently. CEO Steve Huffman admitted that headwinds are coming, warning that the “search ecosystem is under heavy construction” and near-term volatility is expected.

Still, not all analysts are spooked. Citi sees promise in Reddit’s own AI features, like Reddit Answers, and believes new tools could drive user engagement and revenue higher. After Reddit’s Q1 results, Citi raised its price target from $150 to $158, reaffirming a “Buy” rating. Despite concerns over slower daily active user growth from Google’s algorithm tweaks, Citi analysts remain bullish, noting rising engagement, better ad performance, and upcoming features like Direct Purchase Ads as key growth levers. Citi expects Reddit’s revenue to climb 36% this year.

Reddit’s story remains mixed, but cautiously optimistic. With a “Moderate Buy” consensus overall, most analysts lean bullish. Of 23 analysts covering RDDT, 13 recommend a “Strong Buy,” while one gives a “Moderate Buy.” Meanwhile, eight analysts are playing safe with a “Hold” rating, and one has a “Strong Sell” rating.

The mean price target of $155.30 suggests that RDDT could surge by 47% from the current price level. Meanwhile, the Street-high target price of $220, set by B. Riley, implies an upside potential of nearly 110%.