Reddit shares fall 21% in worst day on record despite beating on revenue

Reddit stock just had its worst day on record. Shares closed down 21% on July 31, 2026, after falling as much as 24% during the session, the largest single-day drop since the company went public in March 2024.

Good earnings, bad day

The strange part: the earnings were good. Q2 revenue hit $805 million, up 61% year over year and well above the $730 million analyst consensus compiled by LSEG. GAAP diluted EPS came in at $1.25 against an expected $0.95. Guidance was in line. It was the eighth consecutive quarter of 60%+ revenue growth.

None of it mattered.

What spooked Wall Street

Everything around AI. US daily active uniques slipped to 53.2 million from 53.5 million the previous quarter, the metric investors watch most closely. Google’s AI Overviews are answering questions directly in search results, and referral traffic to publishers including Reddit has been falling.

The earnings report also brought no new AI data-licensing deals, which investors had been counting on as the next revenue engine. A soft user number plus a missing growth story turned a revenue beat into a record selloff.

The irony writes itself: Reddit’s own communities spent the day discussing the crash of the platform they were posting on.

The bigger question

One quarter of slightly softer US users is thin evidence on its own. But the market was not really pricing one metric. It was pricing a thesis: that AI answers are starting to intercept the traffic that platforms like Reddit depend on, and that data licensing may not fill the gap fast enough.

Is this an overreaction to one soft user metric, or the first real crack in the “AI eats the open web” story? The next couple of quarters of traffic data will answer that better than any earnings call.