Reddit grew revenue 61% and nearly tripled profit. The stock fell 20%+ today because of four words: "search referrals were choppy"
u/valbolt ·
Reddit — r/investing
· July 31, 2026 at 19:16
· ⬆ 86 pts
· 💬 69 comments
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AI Summary
Summary
RDDT reported strong Q2 2026 results: revenue +61%, profit nearly tripled, users +18%, yet the stock fell ~20% after management cited "search referrals were choppy."
Author’s thesis: the market overreacted to one bearish phrase, while ignoring the strong fundamentals; he also highlights the irony that Reddit licenses content to Google’s AI that then reduces Reddit’s search traffic.
Quality assessment: Post-earnings commentary/speculation rather than deep DD; it mixes real financial data from CNBC with opinion and does not provide valuation analysis.
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Reddit just had maybe the best quarter of any social platform this year... revenue up 61%, profit almost tripled, users up 18%.
Stock dropped 20% anyway (it was down 23% at the lows, per CNBC).
Why? Four words buried in the investor letter: "search referrals were choppy."
That's it. That's the crash.
Basically most new people find Reddit by googling stuff.
And Google's AI now just answers the question right there on the results page, so nobody clicks through... so Wall Street ignored the great numbers and focused on one fear: if Google stops sending people, where does Reddit's growth come from?
And here's the part that actually breaks my brain: Reddit sells its content to Google to train that same AI... Google pays Reddit for the data, then uses it to answer questions so people don't visit Reddit.
The CEO got on the call and said people don't want AI summaries they want Reddit. The market listened to that argument and took the stock down 20%.
source:
[https://www.cnbc.com/2026/07/31/stocks-making-the-biggest-moves-midday-aapl-amzn-rddt-gddy-iesc.html](https://www.cnbc.com/2026/07/31/stocks-making-the-biggest-moves-midday-aapl-amzn-rddt-gddy-iesc.html)
RDDT grew revenue 61%, nearly tripled profit, and grew users 18%, but the stock fell ~20% because search referrals were "choppy." The market treated a possibly temporary search referral hiccup as an existential threat, creating potential upside if core user growth and monetization remain strong. Buy-the-dip opportunity in a high-growth social platform if the search traffic fear proves overblown; the underlying business quality is still exceptional. Google's AI summaries may structurally reduce Reddit clicks; licensing revenue from Google may not offset lost traffic; valuation may still be too high; moderation and community quality issues could hurt engagement.