Despite Plans for AI-Powered Search, Reddit's Stock Fell 14% This Week (yahoo.com) 55
"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.
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.
Plans for paywalling were bad news (Score:5, Insightful)
Add redditor upheavals, the proposed private reddits, paywalling certain areas (perhaps to stave off porn restrictions), and other changes also contributed to the stock slide.
It's a tough market. Reddit spew stinks as bad as its competitors in many areas. Moderation varies with the wind direction. Sustaining that revenue is going to be tough.
Re: (Score:1)
As the rot from the top spreads downward, people are beginning to realize reddit is censoring, controlling and manipulating subreddits. The excessive over moderation and the banning of anyone the mods label as 'unpleasant' has meant the entire forum is sterile and suspect. This is the inevitable result of classism and the increasingly powerful corporatocracy. Just look what happened to https://en.wikipedia.org/wiki/... [wikipedia.org] just as soon as the establishment realized he had influence, power and ethics. They of co
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This post made me wonder, "what would r/communism say about this?". So I first looked at the rules, starting with rule one.
No non-Marxists
This subreddit is here to facilitate discussion between Marxists.
There are other subreddits aimed at helping along new communists, and subreddits dedicated to non-Marxist communists. This subreddit isn't here to convert naysayers to Marxism.
If you are a member of the police, armed forces, or any other part of the repressive state apparatus of capitalist nations, you will be banned.
Huh...interesting. So I guess police and armed forces of cuba, venezuela, and north korea are welcome there. Everything else is considered to be evil. Let's look at rule number 2:
No oppressive language
Do not attempt to justify your use of oppressive language.
Doing this will almost assuredly result in a ban. Accept the criticism in a principled manner, edit your post or comment accordingly, and move on, learning from your mistake.
We believe that speech, like everything else, has a class character, and that some speech can be oppressive. This is why speech that is patriarchal, white supremacist, cissupremacist, homophobic, ableist, or otherwise oppressive is banned.
TERF is not a slur.
So basically, like Karl Marx IRL, they say they like the idea of free speech, but they will never permit any speech that they alone determine is counterrevolutionary. I think you have "echo chamber" confused wi
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Uh, you mean to say the moderators are too often really shitty people?
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Uh, you mean to say the moderators are too often really shitty people?
I had no idea you were a moderator.
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If I was moderator the moderation would be a lot more appropriate than the shit we see now.
Are you one of those shitty mods getting into your feelings? I've never seen you before so I must've hit a nerve since we don't have a history.
Triggered?
Re: Plans for paywalling were bad news (Score:2)
You are way smarter than... Oh I get it!
Nah I think you just missed the joke. Cool handle, bro.
Re: (Score:2)
Yup. Triggered 2 of you now.
One by my silly name which was chosen to trigger Dunning Krugers and the first one by noting the obvious that mods suck.
Re: Plans for paywalling were bad news (Score:5, Funny)
Reddit is now just a gathering ground for left leaning histrionic teenagers who dare not consider other worldviews exist.
The amount of echo-chambers and pile-ons for anyone who dares question just makes it bland, predictable, and sterile.
Oh, and everyone everyone who disagrees is a Russian bot.
Re: (Score:2, Flamebait)
>It's a tough market. Reddit spew stinks as bad as its competitors in many areas. Moderation varies with the wind direction. Sustaining that revenue is going to be tough.
Reddit has gotten noticeably worse in the last year. There's massive problems with brigading and vote manipulation (for example: https://www.reddit.com/r/Repub... [reddit.com]). Every subreddit has turned into /r/politics (look at https://www.reddit.com/r/Bumpe... [reddit.com]), moderators are banning anyone with an opinion right of Mao, and many subreddits ban p
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If you did not make that post clear sarcasm then I would agree they did the right thing.
Reddit answers? (Score:2)
"despite" (Score:5, Interesting)
The effect would be fairly small though, as reddit has made a lot of mistakes with its users over the years and this is taking its toll.
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Neither. How about, "the market has started to get over the idea that anything with "AI" is magically good?
Maybe some semblance of rationality is returning to the tech market. Until the next buzzword.
We survived NFT, crypto, quantum, and countless others. We will survive AI.
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That is my take as well. "We will use AI!" is an indicator that a company is in trouble and more and more people are waking up to that reality.
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I hope that will happen sooner than later. This year would be nice.
Hmm. Trump and Musk have to replace all these people they are currently firing somehow. I see a golden opportunity there!
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Why do they have to replace all those people? That is the point. They don't need to be there at all. They need to go get real jobs.
I have worked a few years at the DoE. I look forward to seeing tens of billions clawed back from that mess. Roughly 2/3rds of the people I worked with didn't need to be there. The numbers fired so far are trivial compared to the fat that should be cut. No one outside government will notice any of them missing.
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You cannot just fire people with institutional knowledge and expect things to continue working. The processes may be massively inefficient, but if you fire the people that know how they work, you do not magically end up with efficient processes. You end up with no processes. And that means things are grinding to a halt and not only in government.
But you will see. Give it a few months and they will start to manufacture fake "successes" because nothing works anymore. Think Soviet-Union style "success" propaga
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Most of them don't do anything that should be done.
Their institutional knowledge is best forgotten and tossed in the trash.
Anecdote time: I knew this very nice lady at the DoE who was a "tech" worker who did the same nothing data entry job for 25 years. Short version she copied data manually from one system to another that didn't talk to each other. Then someone wrote a script. She was given 3 months to find a new job but was telling me over lunch how her tech skills had completely rotted out and she did
Re:"despite" (Score:4, Insightful)
Sorry, but you _really_ do not know how an administration structure actually works. Not your fault, most engineers do not. I only really found out when I became a part-time IT and IT Security auditor. These structures are _fragile_ , complex, badly designed and badly documented (or not at all) and you cannot do without what they produce.
So this sounds all good and I am aware there is massive inefficiency, but an unprepared "Big Bang" replacement approach will not work and cannot work. Your anecdotes are nice, but do not reflect reality. The problem is not that these people you can just fire do not exist. (But have a look at all the effort even your anecdotes came with. And then think about how this times 10'000 or so could be done in parallel...) These people exist and they can be fired with some preparation and work. The problem is that you cannot identify them reliably, except in a careful, strategic, long-term fashion and with a plan of how things are supposed to work otherwise. A plan that needs to work and that you cannot really test. And a plan that is very, very complex. And if you do not reliably identify who can actually be fired and who cannot and what replacement processes you need to put in place before you fire them, you are bound to fire too many people and that will make everything collapse. Oh, and you need to do all that while you need help from the people you want to fire. Little, but critical detail.
A bureaucracy is like a house of cards: You can remove some cards with no issue. But remove the wrong ones without careful preparation and everything comes crashing down. Another picture would be to slim down Windows by randomly deleting files you think do not serve a purpose. Will that go well? No. And at some point, when nothing works anymore, you do not even know what files you would need to add again. And adding them, if you somehow magically know, might well not even fix things again.
Yes, I get that things are massively inefficient. But the direct approach of just firing people without very careful analysis and planning will make things so much worse. And that is why the only way to go about this that will not result in a complete catastrophe is very slowly and very carefully. Oh, and you need full political support for such a change, because you also need to change laws, regulations, liability, accountability and a few other things. Decrees will not work. This is change that needs several decades. Take less time and you _will_ fail. Take the full time and you may still fail, but you will at least likely not leave scorched earth.
Yes, that is not nice. But that is reality. Details matter. The higher the complexity, the more details matter. And the bureaucracy we are talking here is extremely complex.
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I get what you're saying but it does not apply. Most of these orgs literally should not exist and should not be doing any of the things they're doing.
If there are some things that (for example) USAID should be doing then someone at the state department can figure out who to send the check to and this year's check will be late. It will not end the world if US tax dollars arrive late for some feel good program in another country. It's charity, not strategically critical work.
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Well, the damage from dismantling USAID will, at least in the short term, mostly hit in other places. Long-term, that remains to be seen.
But what about, say, the plans to dismantle the Department of Education? And all the badly prepared slimming down in other places?
So, yes, this very much applies.
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Did education actually improve after the DoE was created?
Re: "despite" (Score:2)
The plan to remove the DoE is to push education policy back to the states.
Itâ(TM)s the right thing to do. If people in Mississippi find their religion-packed biology classes mean no jobs in the real world, then thatâ(TM)s up to them to fix.
Re: "despite" (Score:2)
Re:"despite" (Score:4, Informative)
They don't need to be there at all.
Elon Musk hastily rehires fired nuclear employees [google.com]
Musk has no idea who he's firing or what they do. You have even less of an idea.
Re: "despite" (Score:2)
You're not wrong about stagnant internal corporate processes, but the economy can't absorb the job losses.
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That is my take as well. "We will use AI!" is an indicator that a company is in trouble and more and more people are waking up to that reality.
I wouldn't say it's outright "company is in trouble" so much as "company is trend-hopping" and if the announcement is happening right now, it's not just trend-hopping, it's trend-hopping so far behind the curve as to be splashing down in an empty pool.
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This. The AI search is a bad feature. The point of reddit is to have actual people post and comment, raw and unprocessed content, in their own voice. Making a synthetic amalgamation of the reddit community is antithetical to what makes reddit compelling.
As addictive as any other (Score:2, Interesting)
Re: As addictive as any other (Score:2)
I think this site doesn't allow new accounts anymore. Maybe that makes our accounts valuable somehow, as this may be one of the only sites without "ai" bots soon. Or maybe people are selling their accounts h
TYPO: (Score:1)
> Reddit's Stock Fell 14% Thsi Week
Thsi --> this
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Why "despite"? (Score:2)
Use of AI (LLM variant) means one thing these days: You cannot do. And hence you try to use AI to compensate. That this does not work becomes obvious to more and more people.
Convince me (Score:2)
that the right word is "Despite" and not "Because".
Re: Convince me (Score:2)
I *almost* left my drunkos in this post, just for randomness, but wasn't sure the joke would land. Two, your.
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I just put the words in place. Then the words sed it all for me.
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And usually I'm just awkward with these things.
Or... (Score:2)
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Personally, I think it is the promise of paywall content this year [arstechnica.com]. My guess is Millennials will just stick up their middle finger and jump to some Chinese government funded spyware/misinformware product like the soon to be meta FukTok (I hope that isn't real, guessing it is...).
Buying opportunity? (Score:2)
Looking at their income statements since 2020, they've run losses every year, with 2024 seeing a huge spike to almost half a billion.
This is not Amazon. They aren't building vast warehouses in preparation for changing the world. They're failing to monetize, and at this point I don't know why we should trust that there is much potential for it. They've already built the roads needed to make money. They are not doing so. I don't understand their valuation.
Buying opportunity my ass.
Why do you need ai for this? (Score:2)
Re: Why do you need ai for this? (Score:2)
Re: Why do you need ai for this? (Score:2)
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b. We had a server error...
c. This account has been suspended.
Clearly insufficient AI (Score:2)
Of course it fell (Score:3)
They just up and set fire to their already suffering goodwill.
It's always been the case that the value of Reddit is literally it's users... and they just took a huge step forward in trying to eliminate their "dependency" on those users with AI, which was almost certainly trained on the very posts the users made. Those users were neither asked for permission nor was any serious attempt made to inform them that their previous works were about to be used for an effort to replace them--effectively taking away their agency to keep Reddit in check by withdrawing from the site if the environment became too toxic.
This isn't really a matter of copyright, per se. It's strictly a matter of the social contract under which Reddit benefitted always had the restriction that they couldn't screw over the users because if they drove the users away, Reddit would be "done". They tried to break that social contract and keep the benefit of having active, knowledgeable and engaged users without the responsibility of providing a reasonable place for those users to meet and communicate. That's taking agency from users, which is counter to everything else Reddit represents and objectively evil, so of course their value dropped.
Correlation / causation (Score:1)