Reddit shares have lost 21% since reporting second-quarter 2026 results on July 30, 2026, driven by choppy and declining search referral traffic that led to a slight decrease in daily active users and heightened volatility. The stock is down 38.8% year to date, contrasting with the broader Zacks Computer & Technology sector's 11.7% gain. Despite these headwinds, Reddit's advertising revenues grew 64% year over year to $762 million, daily active uniques rose 18% to 130.3 million, and average revenue per user increased 36% to $6.18. Management guided third-quarter revenues between $860 million and $870 million, implying about 48% year-over-year growth, while the Zacks Consensus Estimate for earnings stands at $1.27 per share. However, intense competition from Pinterest, Meta Platforms, and Snap, along with a stretched valuation reflected in a forward price-to-sales ratio of 6.95 times, has led Zacks to maintain a Hold rating on the stock.
Reddit, Inc.Declining search referral traffic and slight decrease in daily active users hurt user engagement.
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