Reddit reported Q2 2026 revenue of $805 million, up 61% year-over-year, with net income of $253 million — a 183% jump from the same quarter last year. The company issued Q3 2026 revenue guidance of $860 million to $870 million, beating Wall Street expectations. Despite those numbers, the stock fell over 10% in after-hours trading following the earnings release on July 30, 2026 (TechCrunch).

The quarter ended June 30, 2026. Reddit released its results after market close on Thursday, July 30, and held its earnings conference call at 4:30 PM Eastern Time that same day (Reddit Investor Relations). The company also hosted an AMA session on the r/RDDT subreddit alongside the earnings announcement.

The selloff was not about the income statement. It was about traffic. Reddit's U.S. daily active uniques — the metric that counts distinct users who visit at least once per day — declined from 53.5 million in Q1 2026 to 53.2 million in Q2 2026 (TechCrunch). In his Q2 2026 shareholder letter, CEO Steve Huffman wrote: "Search referrals were choppy in the quarter, and traffic was more volatile later in the quarter, but the bigger picture is unchanged: the commercial business is strong."

On the earnings call, a Wall Street analyst told Huffman directly that the stock was down sharply because investors sensed a "user problem, especially in the U.S." The analyst pressed further: "People are looking at the daily and saying…logged-out traffic is going to be under pressure because as search shifts to AI, you're not going to get referrals" (TechCrunch).

Logged-out users — people who arrive at Reddit via a search engine without being signed in to an account — represent a significant portion of Reddit's traffic. AI-powered search summaries increasingly answer queries directly on the search results page without sending users to source sites. Think of it as a librarian who used to point you to a specific book now summarizing the book's contents at the desk and sending you on your way. The referral pipeline that funneled search traffic to Reddit's pages is under threat, and the Q2 DAU decline in the U.S., though small in absolute terms, is the first concrete data point suggesting that pressure has begun to register in the metrics investors watch most closely.

The data-licensing question added fuel. Reddit signed a contract with Google in 2024 to provide its content for AI training purposes (Google Blog). On July 22, 2026, Reddit's stock declined following a Wall Street Journal report that the company was considering ending that Google deal, ahead of its Q2 earnings release (CNBC). Reddit has since signaled it is unsure whether it will renew its data-licensing partnership with Google (TechCrunch).

On the earnings call, the analyst asked Huffman: "Do you see any world where you're not licensing data to Google and OpenAI next year?" Huffman responded that "Reddit is communities and conversation" and that its human aspect would continue to make it a destination for users. On the Google relationship specifically, he said: "I don't think there's a binary outcome…we will make sure that we're maximizing the value for Reddit" (TechCrunch).

That response leaves several doors open. Huffman's phrasing suggests Reddit may renegotiate terms rather than walk away entirely, or may attempt to play licensors against each other to extract better pricing. The reference to "maximizing value" rather than affirming the partnership's continuation is the kind of deliberate ambiguity that companies deploy when they have not yet decided, or have decided but are not ready to say.

The tension here cuts both ways. Reddit's data-licensing revenue from AI companies has been a meaningful growth driver, and walking away from Google or OpenAI would forgo that income. But the same AI companies consuming Reddit's data for training are also building search products that may erode the logged-out referral traffic Reddit depends on for ad impressions. Reddit is, in effect, supplying ammunition to the platforms that are quietly reducing its inbound traffic. Whether the licensing revenue offsets the referral losses is the question investors are now trying to price.

Huffman's argument that Reddit's community and conversational nature makes it a destination independent of search referrals has logic behind it. Reddit's logged-in user base — the core that participates in subreddits rather than arriving via Google — is less exposed to search algorithm shifts. But the logged-out audience has been a major component of recent growth, and the Q2 U.S. DAU number suggests that audience may be starting to contract.

Reddit's Q2 results present a company growing revenue and profit at rates most public companies would envy, yet trading as though the underlying audience is weakening. The market is pricing in the possibility that the AI search transition compresses the referral funnel faster than Reddit can replace that traffic through logged-in engagement or data-licensing deals. The Q3 guidance beat suggests management is not yet seeing that erosion in the advertising business. Whether the guidance holds, and whether the Google data deal is renewed, will likely determine the stock's direction over the next two quarters.