Reddit shares have sold off sharply since its July 30 earnings report despite beating estimates, with retail traders on the platform itself split between value hunters and AI traffic skeptics. Reddit fell 13.7% over the past week and is down 32.7% year to date, though the stock rallied nearly 10% on August 3 to close at about $154.71. The selloff was triggered by CEO Steve Huffman noting that search referrals were choppy, overshadowing a quarter where EPS of $1.25 beat the $0.97 consensus, revenue of $804.9 million topped the $730.96 million estimate, and net income jumped 183%. Sentiment on Reddit swung from bullish to bearish, with r/wallstreetbets skewing bearish and r/investing leaning bullish, as value hunters point to eight consecutive quarters of 60%-plus revenue growth and a trailing PEG ratio of 0.1, while skeptics worry about Google search referral visibility and AI-driven traffic erosion. The next catalyst is the Google data licensing negotiation, which Huffman said has yet to find a win-win resolution.
Reddit, Inc.CEO noted choppy search referrals, raising concerns about AI-driven traffic erosion and Google data licensing uncertainty
Meta Platforms Inc.
NVIDIA Corporation