Reddit lost 21% in its first full post-earnings trading session even after reporting Q2 revenue of $804.9 million, up 61%, and net income of $252.8 million.
Investor concern centered on how much Reddit still relies on Google search referrals for user growth, despite the company saying in its shareholder letter that it is building for direct, repeat use rather than "drive-by traffic."
Operating metrics were strong: daily active uniques reached 130.3 million, advertising revenue rose 64%, and Reddit said its platform now spans more than 26 billion posts and comments across 100,000 active communities.
The report argues the selloff reflects a broader market tension as AI and search increasingly use Reddit's conversations without always sending clicks back, making traffic a weaker measure of the platform's underlying value.