Reddit's Q2 2026: 61% Revenue Growth, Largest Stock Drop Since IPO, and Huffman Questions Google's AI Overviews

Reddit's second-quarter 2026 shareholder letter reported total revenue of $804.9 million, up 61% year over year, with a gross margin of 91.3%. Net income came to $252.8 million, up 183% year over year, and adjusted EBITDA reached $342.8 million, up 106% year over year at a 43% margin — the company's eighth consecutive quarter of 60%-plus revenue growth.

User growth was more mixed. Reddit's letter put average daily active uniques (DAUq) at 130.3 million, up 18%, with U.S. DAUq up 6% and international DAUq up 28%, and logged-out global DAUq at 77.7 million, up 27%. Yahoo Finance reported that U.S. DAUq of 53.2 million came in below the 54 million analysts had expected, and Gigazine noted the figure had slipped from 53.5 million in the first quarter.

The market reaction was severe. Yahoo Finance's Ines Ferré reported the stock 'plunged nearly 21% on Friday,' calling it 'its largest intraday decline since the company went public'; StockStory, writing for Yahoo Finance, put the decline at 23.2% in the morning session; and Gigazine reported shares had already fallen more than 10% in after-hours trading on July 30, the evening the results were released. The plunge extended a difficult 2026 for Reddit's stock, echoed elsewhere in this archive's coverage of the company's AI-search referral-traffic concerns.

Analysts largely tied the drop to the absence of news rather than the numbers: Yahoo Finance reported that the earnings release 'did not announce any new artificial intelligence data licensing agreements, disappointing investors.' Huffman pushed back on that framing, telling investors, 'These deals aren't binary. They have to make sense for Reddit, but there are many ways, I think, for the value to return to Reddit.' Reddit's own guidance for the third quarter called for revenue of $860 million to $870 million and adjusted EBITDA of $385 million to $395 million.

In the shareholder letter, Reddit argued referral volatility was secondary to the underlying business: '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,' and 'while our visibility in referral traffic remains low, we're not building for drive-by traffic. We're building a daily destination.' The letter also framed Reddit as a counterweight to AI-generated content: 'As the internet becomes flooded with synthetic content, people are craving real human perspective. We are the antidote to an automated web. AI compresses the internet into summaries. Reddit delivers the opposite,' adding that 'people don't want a summary of Reddit; they want Reddit' and that 'we've never had more information, but we've never trusted it less.'

On the earnings call, per Engadget, Huffman contrasted Google's traditional search results with its newer AI products: '10 blue links has driven tremendous value and growth to the broader ecosystem,' whereas 'from where we sit, AI Overviews has yet to make a similar level of positive impact, and I think that's consistent across the broader landscape, right?' Engadget reported he left open not renewing Reddit's roughly $60-million-a-year Google licensing deal. The comments followed an eMarketer report, citing the Wall Street Journal, that Reddit was weighing ending Google's AI-training access under the 2024 contract, and that Reddit's stock had already tumbled about 9% that week; Reddit said it approaches the negotiation 'just like any business should, by focusing on doing what's best for Reddit.'