Reddit's Stock Falls Despite Strong Earnings Amid Concerns Over Declining Google Traffic
Despite reporting strong financial results in Q2 of 2026 with a 61% year-over-year revenue increase and more than doubled net income, Reddit (RDDT) saw its stock fall by nearly 23%. The drop was attributed to concerns over declining referral traffic from Google as the search giant increasingly relies on AI-generated answers rather than linking directly to external content like Reddit threads. This shift has raised fears that fewer users are discovering Reddit through traditional means. Reddit's CEO, Steve Huffman, acknowledged the volatility in search referrals but emphasized confidence in the company’s direct user engagement and commercial performance. Daily active unique users rose 18% year-over-year to 130.3 million, with average revenue per user increasing from $4.53 to $6.18. The leadership team is focusing on growing app-based traffic rather than relying on Google referrals. Investors remain wary of the long-term implications for Reddit’s growth strategy as it navigates a changing digital landscape dominated by AI-driven search experiences.
Topics: AI impact on referral traffic Google traffic decline Reddit stock price drop