Reddit Shares Plunge 23% as AI Search Slows High-Value U.S. User Growth
Updated
Updated · Yahoo Finance · Jul 31
Reddit Shares Plunge 23% as AI Search Slows High-Value U.S. User Growth
3 articles · Updated · Yahoo Finance · Jul 31
Summary
Reddit shares sank 23% after Q2 results even though revenue rose 72% to $500 million and adjusted EBITDA jumped to $167 million, showing investors were focused on weakening traffic trends rather than the earnings beat.
18% global daily-user growth masked a much weaker core business: U.S. DAUq growth slowed to 6% from 16% a year earlier, while logged-in user growth held at just 1% for a second straight quarter.
U.S. users matter disproportionately because Reddit makes $11.85 per U.S. user versus $2.26 internationally, and logged-in users are more valuable to advertisers than search-driven logged-out visitors.
AI search summaries are increasingly answering queries without sending users to source sites, leaving Reddit and other traffic-dependent platforms more exposed even after lucrative data-licensing deals with companies like Google.