Reddit’s Management Is “Obfuscating” a User Problem, Says Investor: “Right as This Metric Might Be Turning Against Them, They Opted to Just Hide It”

On The Investor’s Podcast (Ep 838), Daniel Mahncke and Shawn O’Malley discussed an alarming development at Reddit (NYSE:RDDT | RDDT Price Prediction) after its Q2 2026 earnings report. The company recently retired a user metric that appears to be deteriorating, and co-host Shawn O’Malley didn’t mince words about what this means for investors.

Reddit Is Eliminating a Metric Just as It Starts to Weaken

On the July 30 earnings call, CFO Drew Vollero told investors that “Q2 will be the last quarter we report logged-in and logged-out user metrics. In Q3 2026 disclosures, we’ll continue to report total U.S. and international daily and weekly active users, but we’ll no longer report logged-in and logged-out daily active users.” Management framed the change as one that “reflects how we look at and run our business.”

O’Malley argued that Q2’s logged-in user growth of just 7% year over year was already troubling for a stock trading at roughly 40x earnings. He saw this development as a way to hide poor user engagement data: “Rather than speak candidly about the issue with investors, they opted to just hide it… right as this metric that I think is very important might be turning against them, they’re obfuscating things.”

Logged-In Users Are Worth 3x More for Reddit

Only 9% of Reddit’s monthly active users log in daily, compared to 35% for TikTok and 50% for Instagram. Reddit itself has said logged-in users are worth roughly three times more than logged-out users.

Also, more than half of daily Reddit visitors arrive via Google Search rather than the app directly, a structural dependency the hosts flagged as vulnerable to AI overviews, which they estimated reduce click-through rates to original sources by roughly 60%.

Reddit’s CEO Steve Huffman acknowledged the search headwind on the call, saying “external search is volatile, particularly logged out web, but that’s not where our business lives.” He argued app users are worth “multiples more than the search referral traffic” and pointed to new app user retention improving 50% year-over-year on a relative basis as evidence the product work is compounding.

Blowout Revenue Growth Still Sent the Stock Tumbling

Reddit’s Q2 was a financial standout on almost every line. Revenue landed at $804.9 million, up 61.1% year over year, with advertising revenue of $762 million (64% YoY growth) and EPS of $1.25 versus a $0.97 estimate. Adjusted EBITDA margin reached 42.6%, and global ARPU rose to $6.18, up 36% YoY.

The market’s reaction was harsh anyway. Shares fell from $180.90 at filing to $140.67 one day after, and RDDT is down 28.47% year to date, with the stock down 7.7% on Monday.

Reddit’s Clear Under-Monetization Keeps the Bull Case Alive

The host made clear that the podcast is maintaining its current position because the bull case still looks appealing: “If you just look at the earnings numbers and the revenue growth, despite users not growing that fast, it shows you how under-monetized this platform actually is.”

Reddit’s U.S. ARPU of $11.85 still sits well below what larger social peers extract per user, leaving room for the monetization flywheel to run.

However, O’Malley believes slowing user growth hinders the thesis: “For a company trading at 40 times earnings, come on, you got to do better than 7% growth in logged-in users because ultimately that is what underpins their earnings power going forward.“

Key Takeaways

Reddit’s financial results demonstrate how much more revenue the platform can extract from its existing audience, with advertising growth of 64% and global ARPU up 36%. The concern is whether monetization can continue outrunning sluggish growth among the logged-in users who underpin its long-term earnings power.

Contact [email protected] for any questions or corrections.