By Nate Wolf

Reddit reported better-than-expected financial results Thursday, but investors apparently wanted more as worries about disruption by artificial intelligence stack up.

The social-media platform's advertising engine continues to hum along, with revenue per user climbing to a record high in the second quarter. But Thursday's earnings report might not do enough to prove Reddit can keep up its traffic in an AI-driven internet.

Reddit stock fell 13% to $155.51 in after-hours trading. Shares were down 23% this year before the report.

The company posted earnings of $1.25 a share for the second quarter, up from 45 cents a year ago and above analysts' consensus estimate of 95 cents, per FactSet. Revenue surged 61% to $805 million, surpassing Wall Street's call for $731 million.

Global revenue per user surged to $6.18, up 36% from last year and well above expectations. The figure marked a record for Reddit.

The main worry for analysts and investors, however, is that AI chatbots and Google's AI Overviews will cite Reddit and lessen the need for people to click on the site and eventually become logged-in users.

Reddit reported 130.3 million daily active users in the second quarter, up 18% from last year and in line with estimates. U.S. users, however, slipped to 53.2 million from 53.5 million last quarter.

"Your stock is down sharply because there is just a sense from investors that you have a -- I don't want to be blunt -- a user problem," Rich Greenfield, an analyst at LightShed Partners, told the company on a conference call Thursday.

Alphabet and OpenAI each pay an estimated $60 million to $70 million per year to scrape Reddit conversations and use the data to train their AI models. The potential to expand these licensing deals was the core reason Barron's made Reddit a stock pick earlier this week. The company didn't offer updates on negotiations with its partners.

For now, Reddit's stance is that its data and user "ecosystem" are indispensable.

"AI compresses the internet into summaries. Reddit delivers the opposite: deep discussions, passionate debates, and lived experiences," CEO Steve Huffman wrote in a letter to shareholders. "People don't want a summary of Reddit; they want Reddit."

It is on Huffman to prove the company can expand the number of people who want Reddit.

Write to Nate Wolf at nate.wolf@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 30, 2026 17:31 ET (21:31 GMT)