Reddit on Reddit: Why Retail Traders Are Split on the Stock Now

By Trey Thoelcke Published Aug 4, 9:05AM EDT

Quick Read

Reddit beat EPS by 29%, grew revenue 61%, and tripled profit, yet fell 20%+ after Huffman flagged choppy search referrals.
Eight consecutive quarters of 60%+ revenue growth and a PEG of 0.1 split retail traders between value hunters and AI traffic skeptics.
Meta's post-earnings selloff despite 28% revenue growth mirrors RDDT's setup, where both stocks trade as if they missed rather than beat estimates.

Reddit on Reddit: Why Retail Traders Are Split on the Stock Now — © 24/7 Wall St.

Shares of Reddit (NYSE:RDDT | RDDT Price Prediction) have sold off sharply since the July 30 earnings report, despite one of the cleanest fundamental quarters in ad-tech this year. 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.

Sentiment on the platform itself swung from a bullish 70 the afternoon of July 30 to bearish readings in the low 30s by August 2. The trigger was a single line in CEO Steve Huffman’s shareholder letter that overshadowed a blowout quarter.

The Four Words That Sank Reddit

The dominant post across r/stocks pulled 1,685 upvotes and 378 comments, titled: “Reddit grew revenue 61% and nearly tripled profit. The stock fell 20%+ today because of four words: ‘search referrals were choppy.'” The r/stocks thread has since been moderated, but the framing stuck.

The quarter itself was exceptional. EPS came in at $1.25, versus $0.97 expected; revenue hit $804.9 million, against a $730.96 million consensus; and net income jumped 183%. Q3 guidance of $860 million to $870 million beat Wall Street’s $828 million projection. Then Huffman conceded: “Search referrals were choppy in the quarter, and traffic was more volatile later in the quarter.”

Reddit’s Retail Base Splits Between Value Hunters and AI Doubters

Discussion spread across r/stocks, r/investing, and r/wallstreetbets, with WSB skewing bearish (sentiment 28 to 38) and r/investing leaning bullish (68 to 74). The tone is genuinely split.

Google search referral visibility is low, and Google’s Gemini push threatens further traffic erosion, a real risk to ad impressions.
A 445-upvote r/wallstreetbets post pinned DAU concerns on AI bots and Google, extending the bear case beyond referrals.
Value hunters point to eight consecutive quarters of 60%+ revenue growth and a trailing PEG ratio that dropped to 0.1.

The Meta Parallel and What to Watch Next on Reddit

Meta (NASDAQ:META) posted 28% year-on-year revenue growth for the same period and also sold off on soft guidance and AI capex bloat. Reddit’s setup is cleaner: it beat on earnings and guidance, yet trades like it missed both. The next catalyst is the Google data licensing negotiation, and Huffman has said “we have still yet to find that win-win.” Resolution there defines whether the referral drag is a one-quarter blip or a structural headwind.

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.