Reddit Stock Falls Despite Strong Earnings Amid Concerns Over Declining Google Traffic
Despite reporting strong financial results in Q2 of 2026—revenue rose 61% year-over-year to $805 million and net income more than doubled to $253 million—Reddit (RDDT) shares fell by nearly 23%. The stock decline was attributed not to the earnings themselves, but rather a warning in Reddit's investor letter about declining Google search referral traffic. This trend is linked to Google’s increasing use of AI-generated answers instead of directing users to external links like those on Reddit. Reddit CEO Steve Huffman acknowledged that while Q2 saw choppy and volatile search referrals, he remains confident in the company's long-term growth trajectory driven by direct app engagement rather than reliance on Google. Daily active unique users increased 18% year-over-year to 130.3 million, with average revenue per user rising from $4.53 to $6.18. COO Jen Wong emphasized that advertising success is now tied more closely to this organic growth in app usage than search-driven traffic.
Topics: AI impact Google investor sentiment Reddit traffic decline