Reddit shares plunged after CEO Steve Huffman cited choppy search referrals, overshadowing strong earnings and profit growth.
Reddit (NYSE:RDDT) shares fell over 20% following its July 30 earnings report, despite reporting a 61% year-over-year revenue increase to $804.9 million and EPS of $1.25, beating estimates of $0.97. The decline was triggered by CEO Steve Huffman’s comment that search referrals were choppy, which dominated investor sentiment.
The company delivered its eighth consecutive quarter of 60%+ revenue growth and nearly tripled its profit, yet the stock is down 32.7% year to date. Prior to the selloff, Reddit had rallied nearly 10% on August 3, closing at $154.71. Sentiment on the platform shifted from bullish to bearish within days of the report.
The reaction mirrors Meta’s post-earnings selloff earlier this year, where strong fundamentals were overshadowed by broader market concerns. Retail traders remain divided, with some viewing the pullback as a buying opportunity while others question AI-driven traffic sustainability.