Reddit reported Q2 2026 earnings Thursday that beat Wall Street on every major line, revenue of $805 million up 61 percent year over year beating the $730 million estimate, EPS of $1.25 beating the $0.95 consensus by 32 percent, adjusted EBITDA of $343 million beating by 15 percent, Q3 guidance of $865 million at the midpoint beating the $830 million estimate, and the stock fell 10 to 11 percent in after-hours trading anyway.
The reason is four words CEO Steve Huffman put in the investor letter: "search referrals were choppy." Reddit gets the overwhelming majority of its new users from Google search.
When someone Googles a question and a Reddit thread appears in the results, that is Reddit's primary acquisition funnel. "Choppy" search referrals means Google may be sending less traffic Reddit's way, either because of Google's own AI Overviews absorbing queries that would have gone to Reddit, or because of algorithm changes.
Whatever the cause, it is the one thing investors most fear about Reddit's business model, and Huffman named it.
The underlying business remains strong. Daily active users hit 130.3 million, up 18 percent. Net income was $253 million. Free cash flow more than doubled to $261 million. ARPU grew 36 percent globally to $6.18. None of it mattered. Four words.