Reddit Stock Slides 5% Ahead of Q3 Earnings Amid Slowing User Growth
Reddit shares dropped 5% in midday trading to $128.56 ahead of its third-quarter earnings report, bringing its year-to-date loss to 44%. The platform is scheduled to report Q3 results after the closing bell on October 29. Selling pressure accelerated as Wall Street weighed whether slowing U.S. daily active user growth can be offset before investor patience wears thin.
Diverging Fortunes Across Social Media Stocks
Reddit’s decline stands apart from broader sector movements and larger competitors. The Communication Services Select Sector SPDR Fund fell 2% to $101.13, while the broader SPDR S&P 500 ETF Trust slipped 0.5% to $768.14. Among individual peers, Snap stock declined 4% to $5.70, and Pinterest shares dropped 2% to $20.43. Meanwhile, Meta Platforms cut against the selling, climbing 3% to $627.96 after reporting Q3 2026 revenue of $64.6 billion on October 21.
International Expansion Versus U.S. Revenue Gaps
During its July 30, 2026 earnings call, Reddit reported U.S. daily active uniques of 53.2 million for the second quarter, representing a 6% increase. International daily active uniques grew 28% to 77.1 million, accelerating expansion in overseas markets that generate lower returns per user. Reddit’s U.S. average revenue per user sits at $11.85, compared with $6.18 globally. Guidance for the third quarter anticipates revenue between $860 million and $870 million, implying growth of 47% to 49%, down from 61% in the second quarter.
Choppy Search Referrals and Legal Pressures
Steve Huffman addressed traffic headwinds during the July 30 call, stating that search referrals were choppy and traffic grew more volatile toward the end of the quarter. The platform faces additional scrutiny regarding its content ecosystem following a lawsuit filed on October 22, 2025, against Perplexity AI and three other companies over scraped search engine content. Reddit generates revenue primarily through interest-based advertising alongside AI data licensing agreements, leaving its top line exposed to shifts in referral patterns.
What Q4 Guidance Must Deliver for Investors
Market participants are closely monitoring whether Reddit’s upcoming fourth-quarter revenue guidance aligns with Wall Street’s full-year consensus of $1.05 billion to $1.06 billion. The upcoming report will also provide total daily user figures following the company’s decision to discontinue separate reporting for logged-in and logged-out users. Trading at 16x forward earnings, the stock sits at its lowest valuation multiple of the past year, leaving bulls pointing to a six-quarter streak of earnings beats while bears remain cautious over uncertain AI licensing renewals.
Frequently Asked Questions About Reddit Earnings
When does Reddit report its third-quarter 2026 earnings?
Reddit will report its Q3 financial results after the market closes on October 29, followed by a conference call at 4:30 p.m. ET.
What revenue range did Reddit forecast for the third quarter?
Management guided Q3 revenue between $860 million and $870 million, marking a deceleration from the 61% growth recorded in the second quarter.
How do Reddit’s U.S. and international user metrics compare?
In Q2 2026, Reddit reported 53.2 million U.S. daily active uniques alongside 77.1 million international users, with domestic average revenue per user reaching $11.85 compared to $6.18 globally.
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