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Reddit, Inc. (RDDT) Presents at Goldman Sachs Communacopia + Technology Conference 2026 Transcript

AppLovin: Observing the Steady Scaling of RevenueAppLovin (APP +2.23%) primarily generates revenue by offering a specialized digital software suite featuring products like AppDiscovery, which effectively helps mobile application developers market their digital assets globally.

While dealing with multiple law firm inquiries regarding its recent business disclosures, it expanded its advertising tools to all e-commerce merchants and reported an operating margin of 78% for the quarter ended June 30, 2026.

Reddit: A Volatile but Growing Revenue Trajectory Over TimeReddit (RDDT -0.98%) primarily generates revenue by managing an internet platform where everyday individuals form highly specific digital communities to discuss shared passions, exchange links, and consume multimedia content.

It recently rolled out new automated campaign management tools for advertisers and gained formal inclusion in the S&P 500 index, while reporting an operating margin of 29% for the quarter ended June 30, 2026.

Why Revenue Matters for InvestorsRevenue helps everyday investors understand exactly how much gross capital a company successfully captures from its core commercial operations before necessary business expenses are calculated. This metric reveals whether an organization is successfully attracting customers and growing its overall business volume over time.

Comparing the Quarterly Revenue Trends for AppLovin and RedditCalendar quarterAppLovin RevenueReddit RevenueQ3 2024$835.2 million (quarter ended Sept. 30, 2024)$348.4 million (quarter ended Sept. 30, 2024)Q4 2024$1.4 billion (quarter ended Dec. 31, 2024)$427.7 million (quarter ended Dec. 31, 2024)Q1 2025$1.2 billion (quarter ended March 31, 2025)$392.4 million (quarter ended March 31, 2025)Q2 2025$1.3 billion (quarter ended June 30, 2025)$499.6 million (quarter ended June 30, 2025)Q3 2025$1.4 billion (quarter ended Sept. 30, 2025)$584.9 million (quarter ended Sept. 30, 2025)Q4 2025$1.7 billion (quarter ended Dec. 31, 2025)$725.6 million (quarter ended Dec. 31, 2025)Q1 2026$1.8 billion (quarter ended March 31, 2026)$663.4 million (quarter ended March 31, 2026)Q2 2026$1.9 billion (quarter ended June 30, 2026)$804.9 million (quarter ended June 30, 2026)Data source: Company filings. Data as of Sept. 4, 2026.

Foolish TakeExamining the revenue trends for AppLovin and Reddit reveal interesting insights about their businesses. Both depend on digital advertising income to fund their organizations. The ad industry is seasonal, with advertiser spending typically shooting up in the fourth quarter to capture consumers during the key holiday shopping period.

Reddit's sales show this industry trend as its annual income peaks in Q4. Every year, the sales drop in Q1, but display a consistent upward trajectory. This demonstrates the company's ability to capture ad dollars. Key to that success is growth in platform users.

In Q2 of 2026, Reddit's daily active users increased 18% year over year to 130.3 million. This helped it achieve $804.9 million in Q2 sales, which represents the eighth consecutive quarter of more than 60% year-over-year revenue growth.

While Reddit's performance is impressive, AppLovin is perhaps even more so. Until recently, it displayed the typical ad industry Q4 sales spike seen with Reddit. That changed in 2025.

Suddenly, AppLovin's revenue trend showed quarter-over-quarter growth, with Q1 of 2026 exceeding 2025's Q4, which is unusual. This illustrates the company's strength in the mobile advertising arena.

However, AppLovin's stock is down this year, dropping to a 52-week low of $297.50 in August because its sales growth decelerated. Wall Street analysts downgraded the stock as its Q2 revenue of $1.9 billion missed expectations.

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Stock to Watch: Reddit Inc. (RDDT - Free Report) Reddit is a social media and community-led platform that enables real-time discovery, conversation and engagement across a wide range of interest-based forums. With more than 100,000 active communities (organized based on specific interests) known as “subreddits,” users contribute, curate and interact through text, links, images and video. Subreddits are denoted by an “r/” before their names. 

RDDT is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.

Momentum investors should take note of this Computer and Technology stock. RDDT has a Momentum Style Score of B, and shares are up 1.8% over the past four weeks.

Nine analysts revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.44 to $5.27 per share. RDDT boasts an average earnings surprise of +42.3%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, RDDT should be on investors' short list.

Baird just reframed the biggest risk hanging over Reddit stock, and the market responded with its sharpest single-day move in months. Here is what two expiring AI licensing deals actually mean for the bull and bear cases.

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Reddit (NYSE:RDDT | RDDT Price Prediction) stock is rallying Wednesday morning after a research note from Baird argued the market has already discounted the worst outcome for the company’s two AI data licensing agreements, both of which expire next year. That reframing lands on a name whose year has been defined by exactly this question.

Reddit shares are up 7% to $155.07. Meanwhile, Pinterest (NYSE:PINS) stock is essentially unmoved at $21.26, with no matching catalyst hitting the social peer today. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 0.5% to $765.19, showing today’s move in Reddit stock is a single-name repricing.

Reddit stock was down 37% year to date through Tuesday’s close. Today’s rally is a bounce in a name that has already been repriced hard heading into the session.

Baird Reframes the Renewal Overhang Baird analyst Colin Sebastian reiterated a Neutral rating and a $185 price target on Reddit stock. Sebastian wrote that the current share price reflects an outcome near the firm’s low-end scenario for the licensing renewals, with base and bull cases implying $10 and $20 per share of upside respectively. The framing shifts the debate from renewal downside to renewal asymmetry, since the downside case is already reflected in the share price.

The renewal question has been the overhang on Reddit stock all year. Reddit’s licensing agreements with two large AI partners both expire next year, and the company has said substantially all of its licensing revenue comes from those two agreements. That concentration sits at the center of the debate.

What Actually Gets Renegotiated The first agreement, with Alphabet‘s (NASDAQ:GOOGL) Google, dates to a February 2024 expansion giving Google access to Reddit’s Data API and is reported at $60 million a year. The OpenAI agreement followed in May 2024 and is reported at $70 million. OpenAI is privately held.

CEO Steve Huffman has indicated Reddit may seek higher fees on the renewals and shift from flat pricing to usage-based pricing. As of June the platform had 130 million daily active uniques and more than 26 billion posts and comments, and that archive grows every day. Huffman’s argument is that Reddit’s data keeps its value even after years of access, which supports the case for repricing higher on any renewal.

The bear case is straightforward. Agreements could renew at lower prices, cover fewer services, or fail to renew at all. Reddit’s most recent earnings call also flagged choppy search referral traffic and low visibility around AI overviews, both of which touch the same Google relationship that anchors licensing.

What to Watch Next Investors can watch for signs that management confirms renewal terms or timing on upcoming earnings updates. Even a partial renewal at usage-based pricing would recalibrate the debate quickly for Reddit stock.

Traders may want to check for follow-through above prior resistance before treating today’s move as a durable change in trend. Position sizing matters, since the licensing renewals are effectively binary events for a slice of Reddit’s revenue and non-advertising income remains concentrated in two customers. Investors should size their exposure for a range of possible renewal outcomes.

Contact [email protected] for any questions or corrections.

Reddit, Inc. (NYSE: RDDT) today announced that Steve Huffman, Founder and CEO, will host a fireside chat at the Goldman Sachs 2026 Communacopia + Technology Confe

Reddit (RDDT -3.39%) has had a bad year. Its stock is down by more than 30% year-to-date, making it one of the worst-performing stocks in the S&P 500.

However, that doesn't mean Reddit is doing poorly as a company. In fact, now looks like a good buying opportunity. Reddit's year-to-date performance does not align with its fundamentals.

Image source: Getty Images.

Reddit's financials are soaring A lagging stock price does not always indicate poor fundamentals, and Reddit is a good example. The social media company's revenue soared by 61% year over year in its second quarter. Net income also almost tripled year over year.

These aren't one-off results, either. This was Reddit's eighth consecutive quarter of delivering more than 60% year-over-year revenue growth. Reddit is making some money by letting artificial intelligence training companies use its data, but almost all of its revenue still comes from online ads.

Its advertising segment was up 64% year over year, and accounted for roughly 95% of Reddit's total revenue. Growth and rising margins enabled Reddit to repurchase $235 million in shares in the quarter.

This growth is built on more users joining the platform An 18% year-over-year boost in daily active users demonstrates that the current momentum is sustainable. Some companies scramble to raise advertising costs and set fees to achieve higher revenue growth as user growth declines. However, a user base built on healthy growth makes it easier for Reddit to realize high growth rates without penny-pinching its advertisers.

It's not just daily active users that are on the upswing, either. Reddit closed the quarter with 514.6 million weekly active users, which was a 24% year-over-year increase.

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Reddit trades at a 30.5 forward P/E ratio, which isn't too far off from Meta Platforms' (META -0.98%) 19 forward P/E ratio when considering their fundamental progress. Meta Platforms delivered only 28% year-over-year revenue growth and a 3% year-over-year uptick in daily active users.

Reddit already trades at a premium to Meta Platforms, but it's fair to argue that Reddit may deserve a higher premium. Its net income is also growing at a much faster rate than Facebook's parent company, implying that its forward P/E ratio will quickly become more attractive than its current level.

U.S. revenue is still growing at a fast rate Another big advantage Reddit has over most social media platforms is that its U.S. user base is still growing at a respectable rate. The U.S. is the most lucrative region for online platforms, including Reddit, as seen in Reddit's financial results.

Reddit has an average revenue per user of $11.85 in the U.S., compared to a $2.26 ARPU in the rest of the world. Furthermore, U.S. ARPU was up 51% year over year, compared with 31% year-over-year growth in its international ARPU.

It has also become common for companies to report higher user and revenue growth rates in international regions than in the U.S., where markets are more saturated. However, Reddit is still delivering respectable U.S. results, with U.S. weekly active users up 9% year over year, and the international figure up 24%. Q2 was a soft spot for Daily Users in America due to "choppy" search referrals, but Reddit has seen these challenges before.

Reddit is achieving higher U.S. growth numbers than Meta Platforms' global numbers. It demonstrates Reddit still has more market share to tap into, while Meta Platforms has fewer new customers it can add to its family of apps.

International revenue is still up more than U.S. revenue, since Reddit is attracting more users from different regions. Eventually, Reddit will lean more heavily into international opportunities to drive higher revenue growth. However, with U.S. activities still playing a critical role and growing at an exceptional rate, Reddit looks poised to rebound from its lows.

Jennifer L. Wong, the chief opperating officer of Reddit, Inc. (RDDT -0.62%), reported the disposition of 38,113 shares of Class A Common Stock on August 20, according to an SEC Form 4 filing.

Transaction summaryMetricValueTransaction value$5.8 millionShares sold38,113Post-transaction shares (directly held)1,012,226Post-transaction value$152.15 millionTransaction value based on SEC Form 4 weighted average sale price ($151.71); post-transaction value based on the August 20 market close ($150.31).

Key questionsWhat was the nature of this transaction?
The disposition of 38,113 shares was a non-discretionary transaction executed to satisfy tax withholding obligations following the vesting of restricted stock units.What is the scale of the executive's remaining direct equity position?
Wong continues to hold 1,012,226 shares of Class A Common Stock directly, maintaining an equity interest with a market value of $152.15 million as of the August 20 market close.What are the current financial and operational metrics for the company?
San Francisco-based Reddit recorded trailing 12-month revenue of $2.8 billion with a net income of $871.1 million.How has the stock performed relative to the latest market close?
Shares of the company were priced at $153.29 as of the August 21 market close, compared to the transaction execution price of $151.71.Company OverviewMetricValueShare Price (as of market close 2026-08-21)$153.29Market Capitalization$29.5 billionRevenue (TTM)$2.8 billionNet Income (TTM)$871.1 millionCompany SnapshotReddit operates a community-driven internet platform that generates revenue through advertising, premium subscriptions, and API licensing, enabling users to engage in discussions, share content, and participate in thousands of specialized communities organized by shared interests.The company monetizes its user-generated content ecosystem primarily through targeted advertising placements and Reddit Premium subscriptions, while also licensing its data and API access to enterprise clients seeking consumer insights and research capabilities.Reddit's primary audience consists of global internet users spanning diverse demographics, with particular strength among younger audiences and professional communities, while enterprise customers include advertisers, market researchers, and technology companies seeking engagement and data access.Reddit is a leading community-driven content platform with a market capitalization of $29.5 billion, generating $2.8 billion in TTM revenue with $871.1 million in net income. The company's competitive advantage derives from its highly engaged user base, authentic peer-to-peer interactions, and the aggregated knowledge contained within its communities, positioning it as a valuable destination for both consumer engagement and enterprise data applications. Reddit's business model leverages network effects and community-driven content creation to maintain a defensible moat in the digital media and information services landscape.

What this transaction means for investorsWong surrendered 38,113 shares to withholding on vested RSUs and still holds more than a million directly, which is certainly a large enough stake to help ensure she remains aligned with Reddit’s long-term performance. As for the firm’s performance, advertising brought in $762 million last quarter, up 64%, with active advertisers growing more than 70% and the mid-market and SMB channel doubling, and Wong on the earnings call late last month said the strategy is "making every impression more valuable."

U.S. revenue reached $638 million, roughly four-fifths of the company’s total, despite an American daily audience that shrank sequentially. Growth is already stepping down, from 69% in the first quarter to 61% in the second, with the third-quarter guide implying about 48%. Investors sent the stock down 21% the day after that print despite a beat on revenue, profit, and guidance, which tells you the ad numbers alone are no longer buying much patience. Reddit has to pull more revenue out of each American user every quarter now, and it’s unclear for now whether can get easier.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Reddit. The Motley Fool has a disclosure policy.

Benjamin Seong Lee, the chief legal officer of Reddit, Inc. (RDDT -0.62%), disposed of 3,887 shares in a transaction on August 20, according to an SEC Form 4 filing.

Transaction summaryMetricValueShares sold (directly held)3,887Transaction value$590,000Post-transaction shares (directly held)71,536Post-transaction value$10.75 millionTransaction value based on SEC Form 4 weighted average sale price ($151.71); post-transaction value based on the August 20 market close ($150.31).

Key questionsWhat was the nature of the 3,887-share disposition?
The transaction was a non-discretionary withholding by Reddit to satisfy tax obligations tied to the vesting of equity awards, rather than a discretionary market sale by the insider.What is the status of the insider's remaining equity in the company?
Following this withholding, the insider continues to hold 71,536 shares directly, representing a total equity position valued at $10.75 million as of the August 20 market close.What is the current business and financial profile of Reddit?
Reddit manages an internet platform for community dialogue and content sharing, categorized by user interests. The San Francisco-based company serves as a platform for recounting experiences and engaging in direct replies within diverse online groups.Does this transaction signal a change in the insider's investment conviction?
Because the disposition was automatic and tied specifically to tax liabilities, the activity does not reflect a discretionary assessment of the company's valuation or its long-term prospects.Company OverviewMetricValueShare Price (as of market close 2026-08-21)$153.29Market Capitalization$29.5 billionRevenue (TTM)$2.8 billionNet Income (TTM)$871.1 millionCompany SnapshotReddit operates a community-driven internet platform that generates revenue through advertising, premium subscriptions, and API licensing, enabling users to engage in discussions, share content, and participate in thousands of specialized communities organized by shared interests.The company monetizes its user-generated content ecosystem primarily through targeted advertising placements and Reddit Premium subscriptions, while also licensing its data and API access to enterprise clients seeking consumer insights and research capabilities.Reddit's primary audience consists of global internet users spanning diverse demographics, with particular strength among younger audiences and professional communities, while enterprise customers include advertisers, market researchers, and technology companies seeking engagement and data access.Reddit is a leading community-driven content platform with a market capitalization of $29.5 billion, generating $2.8 billion in TTM revenue with $871.1 million in net income. The company's competitive advantage derives from its highly engaged user base, authentic peer-to-peer interactions, and the aggregated knowledge contained within its communities, positioning it as a valuable destination for both consumer engagement and enterprise data applications. Reddit's business model leverages network effects and community-driven content creation to maintain a defensible moat in the digital media and information services landscape.

What this transaction means for investorsLee had 3,887 shares withheld at vesting, among the smallest of Reddit officer filings dated August 20, all of which were relatively routine transactions. More importantly for long-term investors, Lee's role sits close to Reddit's fight against AI firms using its content without a license, and that is very much ongoing. On July 31, a Manhattan federal judge mostly refused to throw out the company's suit against Perplexity and the data broker SerpApi, keeping claims alive under the Digital Millennium Copyright Act. Meanwhile, a separate case against Anthropic, filed in June 2025, is still live.

Licensing sits inside Reddit's other revenue, which reached $43 million last quarter and grew 24% while advertising grew 64%. Lee has made that case publicly since suing Perplexity last October, when he said "AI companies are locked in an arms race for quality human content." It's not yet clear how that arms race will ultimately play out.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Reddit. The Motley Fool has a disclosure policy.

August 25, 2026 1. Meta's New AI Agent Has A Price Tag

Source: Image created by Jester AI.

Meta Platforms (META +1.21%) is close to giving users a personal assistant that can also do their shopping. The company plans to launch a consumer AI agent called Hatch as soon as late August. And a new flagship AI model, codenamed Watermelon, should follow in October, The Information reports. Hatch would let people order from DoorDash (DASH +2.09%), buy from Etsy (ETSY +0.78%), browse Reddit (RDDT -0.62%), check Yelp (YELP +2.98%), and manage Microsoft (MSFT +1.68%) Outlook, all without leaving the app. A WhatsApp feature connecting users to third-party agents could arrive as soon as this week.

Meta priced this like a premium product, not a free perk: Internal plans reportedly include a subscription tier costing up to $199.99 a month. That's a sign Meta thinks people will pay real money for an AI that gets things done, not just one that chats. This is a land grab for the assistant layer: Wire Hatch into food delivery, shopping, and email, and Meta becomes the thing users go through to reach the rest of the internet. If Hatch sticks, Meta owns a toll booth other companies now have to pass through. 2. Bitcoin Blasts Past $80,000 Bitcoin (BTC +1.07%), recommended in Hidden Gems, topped $80,000 this morning, its highest level in months. The move extends a rally that began last week with a three-day surge of more than 20%, the cryptocurrency's best stretch since 2023. A short squeeze forced traders who had bet against Bitcoin to buy it back to cover their positions, liquidating more than $4 billion in bearish bets and pushing the price higher. At the same time, a U.S. Treasury plan to double purchases of longer-dated bonds pushed yields lower. That in turn pushed investors toward riskier assets and stores of value like Bitcoin instead of safer bonds.

Real money is behind this bounce, not just short covering: Spot Bitcoin ETFs took in $1.92 billion last week, the biggest haul since October's cycle peak. That's institutional money flowing in through regulated funds, a different kind of buyer than the retail traders who get flushed out in a squeeze. One good week isn't a verdict: Investment banking specialist BTIG points to a similar spike in 2023 that fizzled once the short covering ran its course. Treat this rally as a data point, not a reason to reposition a portfolio, and watch whether the ETF inflows keep coming next week.

3. Nvidia's Earnings Loom Over a Chip Stock Selloff

Micron (MU -0.27%) shares dropped almost 6% Monday to $911.27, part of a broad semiconductor sell-off as investors braced for Nvidia's (NVDA -4.58%) earnings this Wednesday. The Philadelphia Semiconductor Index fell nearly 2.9%, dragging down Broadcom (AVGO -0.74%), AMD (AMD -2.33%), and Nvidia itself, all down between 2% and 3.5%. Marvell (MRVL -10.28%) reports Thursday, making this the most consequential week yet for the AI infrastructure trade. When one chip company's earnings can move an entire index days before it even reports, that's a sign investors see Nvidia's results as a read on every company that sells into the AI buildout, not just Nvidia's own business.

"Wall Street is counting on Nvidia to keep the AI party going": Fool contributing analyst Lou Whiteman, ahead of tomorrow's Nvidia earnings, said, "With markets now asking hard questions about the sustainability of AI spending and ROI, Nvidia's Jensen Huang's outlook this week is likely to go a long way toward determining how investors feel about AI spending." The bar is already high: Mott Capital's Michael Kramer notes the market has priced in strong growth for Nvidia, meaning even a solid quarter could disappoint if it doesn't clear a demanding bar. That's the trap for expensive stocks: results can improve and still miss what the market already assumed.

4. Zoom, Heico, Intuit All Show Slowing Growth

Growth is cooling across today's Stock Advisor earnings slate, as three recommendations report against tougher year-ago comparisons.

Zoom (ZM -1.83%), a recommendation from both Team Hidden Gems and Team Rule Breakers, reports second-quarter results after the close. Revenue beat expectations last quarter, rising 5.5% year over year to $1.24 billion, and the company added 66 new $100K-plus enterprise customers, reaching 4,534 total, even as growth among its largest customers slowed. Analysts expect that slowdown to continue, forecasting revenue growth of just 4.2% this quarter. Heico (HEI -0.14%), a Team Hidden Gems recommendation, posted a 48% jump in earnings per share last quarter as revenue climbed 25.3%. The aerospace and defense supplier reports third-quarter results this afternoon, with analysts expecting 18% revenue growth, a step down from last quarter's pace. Intuit (INTU +2.89%), a Team Rule Breakers recommendation, delivers a fourth-quarter update after the close. Revenue grew 10.5% year over year last quarter to $8.56 billion, and next-quarter guidance topped analyst estimates on both revenue and earnings. Wall Street expects 11.4% growth this quarter, down from 20.3% a year ago. Intuit has fallen 30% since 2021's recommendation and lags the S&P 500 by 117% across that period, but still remains a Buy. 5. Cloudflare Embraces Agentic Chaos In June, Cloudflare (NET -2.72%) CEO Matthew Prince announced a milestone: more of the internet's traffic now comes from bots than from people, led by AI agents. He would know. Much of that traffic crosses Cloudflare's network, the layer keeping websites secure and fast. Team Rule Breakers and Team Hidden Gems have both recommended Cloudflare more than once. The market is catching on, sending the stock up more than 40% this year.

Building what the next internet runs on: Cloudflare's Workers platform lets customers run code and AI agents on its network without managing servers. It's also building encryption to survive quantum computers, machines that could defeat today's security. As agents grow smarter, their traffic grows more valuable. Customers keep spending more: Cloudflare keeps landing more big-spending customers, and existing ones spend more. Revenue grew 36% year over year. Its dollar-based net retention rate hit 120%. The more a business runs on it, the harder it is to rip out. Cloudflare still loses money by GAAP standards, and Prince doesn't apologize. Free cash flow grows anyway. He told investors in August, "The business model of the next 27 years of the internet is going to be very different, and there's no company in a better position to define what it looks like than Cloudflare."

Team Hidden Gems has a five-year price prediction of $486.17.

Team Rule Breakers has a five-year price prediction of $508.21.

Shares trade around $280 today.

6. Your Take If you were the CEO of Meta for a day and you can eliminate one competitor, who would you choose and why?

Debate with friends and family, or become a member to hear what your fellow Fools are saying!

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Reddit citations within ChatGPT's answers appear to be cratering. It's not bad news for CMOs. NYSE The SEO community is in a frenzy over recent data suggesting that ChatGPT has abruptly stopped citing Reddit in its answers nearly as often. For CMOs who have put time into cracking Reddit, the trend might not be as dire as it sounds.

AI visibility firm Promptwatch kicked off the debate last week by publishing data showing that Reddit's share of ChatGPT citations plunged by 86% in mid-August. Three other AI visibility firms told me they witnessed similar drops.

The shift became a hot topic in the marketing world because it comes as more brands are investing in paid and organic Reddit strategies — some with an eye on boosting their visibility on AI platforms.

The headline number doesn't tell the whole story, however.

AI SEO researcher Suganthan Mohanadasan, who runs the AI SEO agency Snippet Digital, examined the behind-the-scenes web requests ChatGPT makes when researching an answer.

Reddit's CMO, Roxy Young, talks about how brands should connect on the platform

He found ChatGPT was still regularly consulting Reddit when formulating answers — it was simply citing it less often in the final response users see. Per his findings, brand websites were credited more often. Hooray for inbound website traffic!

Still, Tim de Rosen, CEO of AIVO, a startup that measures brand performance across AI platforms, said the sudden drop should be a "wake-up call for CMOs."

"If your AI visibility strategy is built on chasing citations from any single source, you're exposed to exactly this kind of collapse," de Rosen told me.

Duolingo CMO Manu Orssaud told me the company's Reddit strategy focuses on what users are talking about, where they need help, and what they're saying about his brand. He said Duolingo, which this year staffed its first team dedicated to Reddit, isn't actively tracking Reddit's visibility in ChatGPT.

"We don't change our strategy every time an algorithm changes," Orssaud said.

There are often swings in the data when an AI company releases a new model, or Google makes a core update to its search algorithm. Reddit's share of ChatGPT citations also dipped last September, but later recovered.

Reddit's sudden drop in citations is a reminder of how quickly the ground can shift in the constantly moving generative engine optimization dance. And the pace of new model releases shows no sign of slowing.

"As marketing professionals, it's our responsibility to stay informed, remain agile, and adapt our strategies as technologies, consumer behaviors, and discovery platforms continue to change," Kyle Lock, VP of marketing at Butterball, told me.

OpenAI said it regularly updates ChatGPT to improve its relevance and usefulness. The company added that it doesn't target or set a fixed level of visibility for individual websites, and that Reddit continues to be cited in ChatGPT.

A Reddit spokesperson said while LLMs constantly change how they cite web content, what remains consistent is the unique value of Reddit's data: 130 million real people having authentic conversations. For CMOs, it's essentially a massive marketing focus group.

Trying to game Reddit was a risky marketing strategy long before LLMs entered the scene. Communities like r/HailCorporate have spent more than a decade calling out brands suspected of surreptitious shilling.

"If you've been abusing Reddit as a platform to promote yourself, a drop in citations may make it appear less enticing," Glen Allsopp, head of marketing strategy and research at the AI marketing platform Ahrefs, told me. "Nothing should really change for those who view it as a place to legitimately interact with their audience."

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Lara O'Reilly is the anchor of the CMO Insider newsletter.She is a chief correspondent who has covered the digital advertising, marketing, and media industries since 2010. Her current beat includes big tech companies like Alphabet and Meta, adtech firms, agencies, publishers, the creator economy, and CMOs.Lara has previously worked as a reporter and executive producer at titles including The Wall Street Journal, Digiday, Yahoo Finance, and Marketing Week. She was previously Business Insider's senior global advertising editor from 2014 to 2017.Lara is a regular guest on TV and radio and has appeared on outlets such as the BBC, NPR, SiriusXM's Wharton Business Daily, and CTV Television Network. She also frequently speaks on stage at major events such as Web Summit, IFA, VivaTech, Advertising Week, and Cannes Lions.To get in touch with Lara O'Reilly, email [email protected] or contact her on Signal at @loreilly.71

Reddit ChatGPT OpenAI More

Key Takeaways Alphabet's Q2 Google ad revenues rose 14.4% to $81.63B, led by Search and YouTube growth. Gemini-powered AI Max has 500,000 advertisers and delivers 15% more conversions or value on average. Alphabet faces tougher Q3 Search comparisons and an FX headwind, but Gemini and YouTube remain supports. Alphabet (GOOGL - Free Report) is benefiting from strong momentum across its advertising business, supported by continued growth in Google Search and YouTube and deeper integration of Gemini across its ad infrastructure. This strength reinforces Alphabet’s competitive position in digital advertising against Reddit (RDDT - Free Report) and Meta Platforms (META - Free Report) .

Google advertising revenues increased 14.4% year over year to $81.63 billion in the second quarter of 2026. Google Search & other revenues jumped 17% to $63.27 billion, while YouTube advertising revenues increased 13% to $11.06 billion. Retail and finance were the biggest contributors to Search growth, while direct response and brand advertising supported YouTube.

Alphabet’s growing use of Gemini across its advertising infrastructure remains a key catalyst. Gemini helps understand longer and more detailed searches. In the second quarter of 2026, shopping ads achieved a 20% improvement in showing highly relevant advertisements. AI Max has already been adopted by 500,000 advertisers, with AI-powered campaigns generating an average 15% more conversions or value at a similar return on ad spend.

YouTube further strengthens GOOGL’s competitive position against Reddit and Meta Platforms through its combination of connected TV, Shorts, creators and direct-response advertising. Continued innovation in AI-driven targeting, shoppable formats and Search monetization should help Alphabet capture a greater share of advertising budgets despite intense competition.

Alphabet expects AI-driven improvements in Search to continue supporting user and advertiser experiences. However, third-quarter growth will face tougher Search comparisons and a slight foreign-exchange headwind, particularly across Search and YouTube ads. Despite the headwinds, continued Gemini integration, rising Search engagement and expanding YouTube monetization are expected to support advertising growth and help GOOGL compete effectively with RDDT and META.

How Competitors Fare Against GOOGLDespite Alphabet’s expanding portfolio, the company faces stiff competition from Reddit and Meta Platforms. Both companies are expanding their footprint in the rapidly growing digital ad market.

Reddit is benefiting from strong demand in its advertising business, which has become a key growth driver of the company’s impressive financial performance and future growth prospects. In the second quarter of 2026, Reddit’s advertising revenues grew 64% year over year to $762 million, outpacing even its impressive total revenue growth of 61%. This growth is broad-based, with strength across various sales channels, including large customers, mid-market and small and medium-sized businesses.

Meta’s strong growth in its advertising business has been noteworthy. In the second quarter of 2026, Meta reported $59.4 billion in ad revenues, up 27% year over year, with a 14% increase in ad impressions and a 12% rise in average price per ad. This growth is underpinned by Meta’s ability to deliver highly engaging experiences across its platforms, which include Facebook, Instagram, WhatsApp and Threads.

GOOGL’s Share Price Performance, Valuation & EstimatesAlphabet shares have risen 9.3% year to date, underperforming the broader Zacks Computer and Technology sector’s growth of 15.4%.

GOOGL Stock Performance
Image Source: Zacks Investment Research

GOOGL stock is trading at a premium, with a forward 12-month price/sales of 8.31X compared with the broader Computer and Technology sector’s 6.32X. Alphabet has a Value Score of D.

GOOGL Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $20.51 per share, which has increased 1.73% over the past 30 days. This suggests 89.73% growth from 2025’s reported figure.

Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Reddit's business is compounding at a pace few public companies can match, yet the stock keeps sliding. Jim Cramer sees a disconnect so extreme he used a word he rarely applies to growth names.

On the Aug. 25 episode of Mad Money, Jim Cramer responded to a lightning round caller asking about a potential Reddit (NYSE:RDDT | RDDT Price Prediction) and Netflix (NASDAQ:NFLX) tie-up with a direct call: “I think Reddit is such a buy at $166. It’s ridiculously cheap. So with or without synergy with Netflix, you’ve got what I regard as a buy.”

The stock he was talking about, Reddit, closed at $162.45 on Aug. 25 and has been one of the most punished growth names of 2026. But the gap between Cramer’s call and the tape is the whole story. Reddit is down nearly 35% year to date and down more than 25% over the past year, even as the underlying business continues to compound at a pace few public companies can match.

A Business Growing 61%, a Stock Falling 29% Reddit’s Q2 2026 press release, filed July 30, laid out numbers that do not square with a 29% drawdown. Revenue rose 61.1% to $804.9 million, easily topping the $731 million consensus. EPS of $1.25 beat by 29.23%, marking the fifth straight quarter Reddit has cleared Street estimates. Net income more than doubled to $252.8 million, and adjusted EBITDA margin came in at 42.6%.

Advertising revenue jumped 64% to $762 million. Global ARPU climbed 36% to $6.18, and U.S. ARPU rose 51% to $11.85. On the call, CFO Drew Vollero pointed out that “Reddit grew more than 60% for the eighth consecutive quarter while operating cash flow adjusted EBITDA, net income, and GAAP EPS all more than doubled in the quarter year over year.”

Reddit’s Balance Sheet Agrees With Cramer The company’s own capital allocation is the strongest supporting evidence for the “ridiculously cheap” thesis. In Q2, Reddit repurchased 1.5 million Class A shares at an average price of $157.57 under a $235 million program, with roughly $760 million remaining under authorization. Cash and marketable securities stood at $2.8 billion. Management is buying the same stock at nearly the same price Cramer flagged.

Valuation math shows why the bulls have oxygen. Alpha Vantage lists Reddit’s forward P/E at 30, with a PEG of 0.99 against expected growth, and an analyst target price of $214.84 versus the current quote. Sell-side coverage skews positive with six Strong Buy ratings and 17 Buy ratings.

Bear Case Has a Name: Search Referrals The market is looking past the earnings and discounting the top-of-funnel. Reddit itself flagged that search referrals were choppy in Q2 with more volatile traffic later in the quarter, and it acknowledged low visibility into referral traffic from search engines as AI-generated answers absorb queries that used to land on Reddit threads. CEO Steve Huffman is leaning into a direct-usage strategy, saying “The direct users, the app users are worth multiples more than the search referral traffic.”

New app user retention was up 50% year over year on a relative basis, and Reddit now reaches over half a billion people weekly. Positioning has not helped either. Shares fell 8.78% between Aug. 14 and Aug. 25, giving back the S&P 500 inclusion pop.

What to Watch Reddit guided Q3 revenue to $860 million to $870 million and adjusted EBITDA to $385 million to $395 million, implying continued sequential acceleration. The stock reaction from here will hinge on whether direct app usage can offset search decay, and whether the buyback pace picks up while shares sit below management’s Q2 average cost. As for the Netflix angle Cramer batted away, that comparison remains hypothetical. The concrete reality is a growth compounder with a 42% EBITDA margin trading well below where its own board is buying.

Contact [email protected] for any questions or corrections.

The S&P 500 (^GSPC -0.87%) is widely regarded as the most important U.S. stock index. To be included in the index, a U.S.-based company must meet a set of criteria, including demonstrating consistent profitability. While the committee typically adds and removes constituent companies from the index quarterly, it occasionally needs to add a new company mid-quarter.

Such is the case with the most recent addition. After AvalonBay Communities merged with Equity Residential to form Vivmark, the index found itself one company short. The committee selected Reddit (RDDT -0.92%) to replace it. The social media stock made its market debut just a couple of years ago, but it's already up 365% from its IPO price as of this writing.

The good news is it's not too late to buy into Reddit. Some recent headwinds have created a buying opportunity for long-term investors.

Image source: Getty Images.

A lot to like, but will AI disrupt it? Reddit shares sold off after the company reported its second-quarter earnings results. The financials were very strong. Revenue increased 61% year over year. Adjusted EBITDA margin expanded to 42.6% from 40.1% last quarter and 33.4% a year ago. It also repurchased $235 million in shares using its growing free cash flow to help offset stock-based compensation. Ultimately, earnings per share climbed an impressive 178% from last year.

But investors appear hung up on the fact that daily active users in the U.S. declined sequentially. It's just the latest signal that artificial intelligence is disrupting its business. AI Overviews on Google may be cutting off a key source of traffic for the platform, thereby slowing user growth in more mature markets.

That's important because Reddit makes most of its revenue from advertising. Other revenue, including data licensing for AI developers, accounted for just 5% of Reddit's total sales last quarter. Without a steady inflow of new users, revenue growth will eventually dry up.

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To that end, Reddit is positioning its platform as an alternative to artificial intelligence. Instead of asking questions to an AI chatbot, you can ask a real community of human beings and get tailored answers with better nuance. Ultimately, management believes the platform will grow to 100 million logged-in users in the U.S. (up from 23 million) and 1 billion globally (up from 53 million). That suggests a long runway for growth.

Even with sluggish recent user growth, management has made significant progress in monetizing existing users. Average revenue per user climbed 36% globally and 51% in the U.S. last quarter. Continued improvements in its ad targeting and ad load optimization should provide another path to high revenue growth as management works to accelerate user growth.

Fears about AI disrupting its business have pushed the valuation to a very attractive 21 times earnings expectations. For a company capable of producing earnings growth of around 25% per year, based on analysts' estimates, that's a great price to pay and suggests the stock price could climb higher from here.

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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.

Reddit recently said it would bring most viral stories to life through a new “video Reddit” experience, allowing users to listen to Reddit posts in the background while doing other tasks and activities. On Monday, Reddit will begin testing an initial version of this experience with both video and audio posts across select communities to see which type of posts resonate with its users and have the potential to scale.

The company announced its plans for narrated Reddit videos during its second-quarter earnings call in July, when CEO Steve Huffman told analysts on the quarterly call that people were already consuming Reddit content like this on other platforms.

He was referring to how other social media platforms, like TikTok and Meta’s Reels, often feature popular Reddit stories narrated through a text-to-speech feature or read aloud by creators. Some of those videos display the words on screen as they’re read or are accompanied by unrelated footage, like video gameplay or cooking content.

Screenshot of TikTok’s Reddit storiesImage Credits:TikTok screenshot “There is an emerging content type elsewhere on the internet of, basically, podcasts where people read Reddit content,” Huffman explained on the call. “I think this version of, like, listened-to or spoken Reddit can be really engaging, as well,” he added.

Reddit tells TechCrunch the initial tests are early, limited experiments meant to provide the company with a better understanding of how these formats can be useful to users, and whether they can be done in a way that feels authentic to Reddit. Users will be able to choose whether they want to “read” or “play” a post, when available.

The test will focus only on select English-language posts for the time being, and will be accessible through Reddit’s iOS and Android apps.

The different formats will not replace the original, text-only post, Reddit notes. Both the original post and the comments can still be viewed and engaged with as before. Instead, Reddit suggests that people may sometimes want to listen to Reddit audio while exercising, walking, or running errands, while others might want to watch written conversations come to life through video and audio combined.

This isn’t the first time Reddit has experimented with video. The company in earlier years rolled out native video hosting and tried various iterations of a TikTok-style video feed. More recently, Reddit launched support for video in comments, which it says now accounts for more than 10% of video posts on its platform.

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Snap (NYSE:SNAP | SNAP Price Prediction) shares are down 3% to $5.24 Monday midday, giving back part of a sharp overnight decline that saw the stock fall as much as 12% to $4.74 before buyers stepped in. The catalyst is a federal appeals court ruling that pierces a legal shield social platforms have long relied upon.

The intraday recovery matters as much as the initial drop. It suggests the market is trying to price an unquantifiable legal overhang rather than treating the ruling as an outright crisis. Snap stock now sits closer to the low end of a 52-week range of $3.81 to $9.28, with shares down 33% year to date (YTD) and 24% over the past year.

The weakness extends across the sector. Reddit (NYSE:RDDT), Meta Platforms (NASDAQ:META), Pinterest (NYSE:PINS), and the sector ETF all trade lower, framing the ruling as an industry-wide liability question rather than a Snap-only problem.

The Ninth Circuit Ruling On August 10 the 9th U.S. Circuit Court of Appeals rejected the Section 230 immunity sought by Snap and other large social media companies. Section 230 of the Communications Decency Act has historically shielded platforms from liability tied to user-generated content, and the decision narrows that protection.

The ruling clears the way for more than 3,000 consolidated lawsuits brought by states, municipalities, school districts and families to proceed. The complaints allege that Snapchat was deliberately designed with features intended to maximize engagement among minors.

Snap could face substantial legal expenses, potential settlement costs, and product-design restrictions if the cases advance. The ultimate financial impact cannot be determined yet, which is precisely why the market is struggling to price it. Management flagged the risk in the Q2 2026 filing, citing “Increased regulatory scrutiny on youth related issues” and several trials scheduled later this year.

Earnings Beat Overshadowed The legal news is overwhelming what was otherwise a solid quarter for Snap. On August 3, the company reported Q2 2026 revenue of $1.6 billion, up 18.9% year over year (YoY) and beating the $1.53 billion consensus. Adjusted EBITDA came in at $249.62 million, versus $41.27 million a year earlier.

Analyst sentiment hasn’t followed. Truist and Bank of America both lowered their price targets after the report while keeping Hold or Neutral ratings, pointing to softening digital advertising demand and litigation uncertainty. Operational progress is being drowned out by an unquantifiable legal overhang.

Adding to the noise, Snap CTO Robert Murphy sold 4 million Class A shares on August 5 and 6 for approximately $21.6 million under a pre-arranged trading plan. That’s a scheduled 10b5-1 style transaction, routinely used for diversification and tax planning, though the size and timing drew attention given the litigation backdrop.

Peers Slip on the Sector Read Meta Platforms shares are down 3% to $573.9, with the largest advertising-driven social platform sliding 10% YTD and 24% over the past year. Meta Platforms stock has been the sector’s bellwether, and it’s tracking the industry-wide liability question closely.

Reddit shares are down 3% to $173.45, giving back a portion of last week’s rally. Reddit stock is down 23% YTD but was up 10% for the week through Friday, reflecting momentum from index-inclusion news that had dominated the tape.

Pinterest shares are down 4% to $23.2, marking the steepest peer drop. Pinterest stock, tied to visual discovery and advertising, is down 7% YTD.

Sector ETF Reaction Global X Social Media ETF (NASDAQ:SOCL) shares are down 1% to $46.11, with the fund down 15% YTD. That softer decline suggests the ruling is being priced as a sector-wide but modest overhang, with the sharpest damage concentrated in Snap.

The ETF is a narrow thematic fund with meaningful concentration risk, and it isn’t leveraged. Its shallower move relative to Snap’s illustrates how index construction can dilute single-name legal shocks.

What to Watch Investors can watch for whether Snap or other platforms seek further appellate review, and whether early procedural rulings in the consolidated cases signal the scale of exposure. Greater clarity on potential liabilities could eventually remove the overhang rather than only create one.

The litigation is at an early stage and no damages have been determined. Traders can also watch for signs that analysts begin modeling a litigation reserve and whether digital advertising demand shows a more durable recovery. Snap’s earnings beat and the intraday bounce off the lows suggest buyers see value at the bottom of the range, even as the legal picture remains unresolved.

Contact [email protected] for any questions or corrections.

Shares of social media site Reddit Inc (RDDT, Financials) soared more than 11% after S&P Dow Jones Indices indicated the business will be included to the S&P 50

Reddit (RDDT +12.63%) is going into the S&P 500 (^GSPC -0.17%). S&P Dow Jones Indices said Thursday evening that the social media company will replace AvalonBay Communities in the index before the market opens on Tuesday, Aug. 18. AvalonBay is leaving because a fellow index member, Equity Residential, is acquiring it.

Investors treated the announcement as a windfall. Reddit shares were up about 13% in Friday trading, near $179.

Even after the jump, the stock sits roughly 37% below its 52-week high of $282.95.

The logic behind the pop is simple enough. Index funds tracking the S&P 500 must buy Reddit shares by Tuesday, and forced buying should push the price up. But is joining the index worth 13% of a company's value? The best research on the subject says the index bump has been shrinking for decades, and that over the most recent one, it essentially vanished.

Image source: The Motley Fool.

The disappearing index effect
In a study titled exactly that, Robin Greenwood and Marco Sammon of Harvard Business School measured the abnormal return (the move beyond what the market would have delivered anyway) for every S&P 500 addition between 1980 and 2020.

The effect wasn't always small. Additions gained an average of 3.4% in the 1980s, and the figure swelled to 7.4% in the 1990s. From there, though, it faded -- to 5.2% in the 2000s, and to less than 1% over the 2010s, a result the authors call statistically indistinguishable from zero. The pattern holds in reverse, too. Getting dropped from the index cost the average deletion 16.1% in the 1990s and just 0.6% in the 2010s.

Companies jumping straight into the index from outside S&P's smaller benchmarks did better, and that's Reddit's situation. But the same decay shows up: direct additions returned 10.2% in the late 1990s, 8.8% in the 2000s, and 5.4% in the 2010s -- and even that number needs an asterisk, because the enormous 2020 inclusion rally in Tesla props it up. Excluding Tesla, the additions of 2020 averaged roughly nothing.

The market adapted
Why did the effect fade? The authors' answer is mostly structural. More additions now migrate up from the S&P MidCap index, where index-tracking money already owns them, so the new buying is smaller than it looks. And the market has become far better at supplying shares when index funds do have to buy. Plenty of investors now stand ready to take the other side of the trade.

Anticipation plays a part, too. The cumulative climb in the stocks that ended up joining, measured across the 100 trading days before the announcement, grew from 9.6% in the 1990s to 18.7% in the 2010s -- though the authors note that could equally reflect the index getting better at adding recent winners.

None of this is to say Reddit's Friday jump will simply reverse. Big inclusion rallies can still happen, as Tesla's once did. But the record says they are the exception now, not the rule -- and that on average, the badge itself has been worth close to nothing once the buying settles.

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What the index can't fix
What Reddit keeps from here rides on the business, and the business is a strange mix of dominant and fragile.

The dominant part is easy to see. Revenue has grown more than 60% year over year for eight straight quarters, reaching $2.8 billion over the trailing 12 months. And the company is solidly profitable, with about $871 million of net income over that span.

The fragile part showed up two weeks ago. Reddit's stock sank after management told investors its search referral traffic had been choppy, reviving an old worry: A large share of Reddit's traffic arrives through Google, and Google's AI-generated answers increasingly make searchers less likely to click through.

At about 40 times earnings, Reddit trades at a price that assumes the growth continues. That looked expensive to the market two weeks ago, and an index announcement changes exactly nothing about the user pipeline.

I'd be cautious here.

Reddit (RDDT), the social platform powered by millions of user-created communities, will enter the S&P 500 (SPY) before trading begins August 18. Wall Street lo

Reddit, Inc. (RDDT +11.41%) stock was up 10.7% as of 2:22 p.m. ET today while the S&P 500 and Nasdaq Composite were down 0.2% and 0.4%, respectively.

Shares of the social media company are flying after it was announced that Reddit would join the S&P 500.

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Why Reddit is joining the S&P 500 now
S&P Dow Jones indexes said after the close on Thursday that Reddit will replace AvalonBay Communities in the S&P 500 before the market opens on Aug. 18. AvalonBay was just acquired by Equity Residential, freeing a slot in the index outside the usual rebalancing schedule.

Funds that track the S&P 500 have to own every company in it, at whatever weight the index assigns. The buying is automatic and mechanical. JPMorgan estimates that, in total, about 16.7 million Reddit shares will be bought up.

Image source: Getty Images.

Reddit's growth is impressive, but there's a catch
Reddit generated $805 million in second-quarter revenue, up 61% year over year (YoY), while net income reached $253 million. Daily active users -- a key metric for social media platforms -- increased 18%.

That all sounds very positive, but it obscures a major issue the platform is facing. AI search results are more and more keeping users from clicking through to Reddit itself. If this trend continues, it could spell real trouble for a company that needs to keep growing at a rapid pace to support its valuation.

JPMorgan Chase is an advertising partner of Motley Fool Money. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Reddit. The Motley Fool recommends AvalonBay Communities. The Motley Fool has a disclosure policy.

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Shares of Reddit (NYSE:RDDT | RDDT Price Prediction) are rallying Friday afternoon after S&P Dow Jones Indices announced late Thursday that the stock will be added to the S&P 500 prior to the start of trading on Tuesday, Aug. 18. Reddit stock is trading around $175, up 11% on the day.

Even with today’s pop, Reddit stock sits down 24% year to date (YTD). That leaves a real question for investors: what would it take to push shares back to $200, a level the stock traded at just one month ago?

The S&P 500 Pop Is Fading Index inclusion is a mechanical buying event. Funds benchmarked to the S&P 500 have to own the stock once it enters the index. Traders know this, which is why they often front-run the move.

The intraday pattern tells that story. Reddit stock was up more than 15% early Friday, up 14% around midday, and by early afternoon was up 11%. The pop faded, evidently, as the session wore on.

Reddit qualified because S&P applies a 12-month trading history rule, which the committee recently cited when declining to fast-track SpaceX (NASDAQ:SPCX) after its June IPO. Reddit went public in March 2024 and has posted profits nearly every quarter since.

Why $200 Isn’t a Moonshot The $200 level isn’t ambitious in historical terms. Reddit stock traded at $203.27 on July 14 and began the year at $229.87.

The stock is still up 213% from its March 2024 IPO price of $50.44.

The fundamental case is intact. The company’s Q2 2026 revenue rose 61% year over year to $805 million, marking Reddit’s highest-ever quarterly revenue. EPS jumped 178% to $1.25.

Furthermore, Reddit’s global daily active uniques grew 18% year over year to 130.3 million, and sales have increased by more than 10% in each of the past 13 quarters.

The Valuation Tension Valuation considerations could hold the key to the $200 question. Reddit stock trades at a trailing twelve month P/E ratio of 39.64x. Meta Platforms (NASDAQ:META) trades at 21.64x, while Alphabet (NASDAQ:GOOGL) sits at 17.16x, the cheapest in the group.

Snap (NYSE:SNAP) has no P/E ratio because it isn’t profitable on a trailing 12-month basis. Also, the Global X Social Media ETF (NASDAQ:SOCL) carries a 19.49x TTM P/E ratio.

Even after the year-to-date decline, Reddit stock remains the most expensive name in its peer group. Getting back to $200 requires either further multiple expansion from an already-premium level or earnings growing into the multiple. Index inclusion drives mechanical flows rather than earnings.

The peer tape frames the divergence. Alphabet stock is up 10% YTD, Meta Platforms stock is down 10% YTD, Snap stock is down 34% YTD, and the Global X Social Media ETF is down 15% YTD.

The Bull and Bear Cases KeyBanc analyst Justin Patterson framed the bull view cogently. He stated:

In our view, Reddit’s investments in community and ad monetization should create a durable >30% annual revenue growth business with a path to 50% EBITDA margin. Further, we believe Reddit’s data is becoming more valuable to LLMs and model training, creating a potential upside catalyst into 2027.

Reddit CEO Steve Huffman, speaking with Yahoo Finance, asserted that “Reddit is so naturally commercial: Forty percent of the conversations people are having organically on Reddit are more or less about what to buy.”

The bear case has weight, too. Yahoo Finance reported that investors question whether Reddit’s growth is sustainable, which is why the stock has lagged. The S&P 500 is up 13% for the year, so Reddit has trailed the index it’s about to join.

What to Watch Now Investors can watch for whether index-inclusion buying materializes into next week or was already front-run, which today’s fading move hints at. Reddit’s Q3 results, due October 29, will test the 13-quarter streak of 10%-plus sales growth. Traders may want to watch for whether Reddit’s data licensing becomes a disclosed revenue line, as this is the 2027 catalyst that KeyBanc flagged.

Contact [email protected] for any questions or corrections.

Reddit Inc (NYSE:RDDT) shares jumped more than 16% on Friday after S&P Dow Jones Indices said the company will join the S&P 500 index next week.

The inclusion is expected to trigger mandatory buying from institutional funds that track the benchmark.

The index milestone follows a strong second-quarter report from Reddit, which posted revenue of about $805 million, up 61% from a year earlier, and diluted earnings per share of $1.25, topping Wall Street estimates.

The company also issued third-quarter revenue guidance of $860 million to $870 million, above analyst expectations.

Advertising remained Reddit's biggest growth driver, with ad revenue rising about 64% year-over-year to $762 million.

The company credited improvements to its automated ad stack for the gains, and it maintained a gross margin above 91% while net income more than doubled from the prior year.

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Index additions have become one of the most reliable short-term catalysts in the stock market. When a company is added to the S&P 500, every fund that tracks the index — passively managing trillions of dollars — has no choice but to buy shares, regardless of valuation. That forced buying creates a predictable pop. 

But predictable pops and durable investments are two different things, and conflating them is how investors end up holding an expensive stock for the wrong reasons. Reddit‘s (NYSE:RDDT | RDDT Price Prediction) index-inclusion rally is a textbook example worth studying before you chase it.

The Mechanical Pop, Explained Reddit shares are climbing roughly 14% in midday trading today after S&P Dow Jones Indices announced Thursday that the company will join the S&P 500 later this month, taking the spot vacated by AvalonBay Communities (NYSE:AVB), which is being acquired by Equity Residential Properties Trust (NYSE:EQR). That’s a mechanical reaction, not a verdict on Reddit’s business.

Here’s why the move is so pronounced. JPMorgan estimates that index funds tracking the S&P 500 will need to purchase roughly 16.7 million Reddit shares to match its new index weighting. Reddit’s average daily trading volume since its March 2024 IPO has run around 5.98 million shares. That means forced buyers need to absorb nearly three times a typical day’s volume, concentrated around the rebalancing date. When demand outpaces float that dramatically, price gaps higher — that’s supply and demand, not a change in fundamentals.

Forced buying creates a temporary 14% illusion. Don't mistake a mechanical index pop for long-term growth. © 24/7 Wall St. History Says the Euphoria Fades Typically, after the confetti settles, stocks added to the index gain an average of 7.5% during the announcement week, according to S&P Dow Jones data covering additions from 2010 through 2020. That lines up neatly with what Reddit is doing right now. But the same data shows those gains mostly don’t compound. Over the following year, newly added stocks delivered only about 2% to 3% of excess return relative to the broader index — a fraction of the initial pop.

In short, the index bid is real, but it’s temporary. Once the forced buyers finish buying, the stock trades on its own merits again. And that’s where Reddit’s story gets more complicated.

The Business Underneath the Rally Reddit’s most recent quarterly results showed why index euphoria and business quality can diverge. Global daily active unique users grew 18% year over year, but the composition of that growth is the concerning part. 

Logged-in users — the ones who post, comment, and build the habits advertisers pay for — grew just 1%, down sharply from 12% growth a year earlier. Meanwhile, logged-out visitors, who are far less valuable to advertisers, expanded much faster. U.S. users, who generate roughly five times the revenue per user of international users, also saw growth decelerate.

The likely culprit: AI-powered search summaries, including those built on Reddit’s own licensing deal with Alphabet‘s (NASDAQ:GOOG) Google, are increasingly answering user questions without sending anyone to Reddit itself. Reddit gets paid for the data, but it may be losing the very engagement that makes its community — and its advertising business — valuable long-term. Management has also signaled it will stop breaking out logged-in versus logged-out user figures going forward, reducing the visibility investors have into this exact trend.

Key Takeaway Regardless of where Reddit trades this week, the index-addition rally is a supply-and-demand event, not an endorsement of the underlying business. History from S&P Dow Jones’s own data says the bulk of the excess return has likely already happened, and what’s left, on average, is closer to 2% to 3% over the next year — not the kind of edge worth paying up for. 

Combine that with slowing logged-in engagement and a business model that may be quietly cannibalized by the AI tools it’s licensing its content to, and the case for buying into this pop gets thinner, not stronger. Sharp investors can let the index funds do their required buying and watch from the sidelines instead.

Contact [email protected] for any questions or corrections.

14.8.2026 16:26, AMAT, RDDT, SPCX

Index Dow Jones 0 % na 53842,23 b., S&P 500 +0,02 % na 7800,72 b., Nasdaq Composite -0,11 % na 26774,81 b.

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Akcie společnosti Reddit vstoupí do indexu S&P 500. Reddit nahradí realitní společnost AvalonBay Communities a změna začne platit před otevřením trhu 18. srpna. Akcie Redditu po oznámení rostou o více než 10 %.

Index S&P 500 +0,02 % na 7800,72 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Energie +1,5 % Zdravotní péče -0,5 % Komunikační služby +0,6 % Informační technologie -0,3 % Základní materiály +0,5 % Finanční sektor -0,1 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Lumentum Holdings (LITE) +6,1 % Broadcom (AVGO) -5,0 % Sandisk Corp (SNDK) +6,0 % Workday (WDAY) -4,8 % Fox Corp (FOXA) +4,9 % Applied Materials (AMAT) -4,6 % Corning (GLW) +4,8 % GoDaddy (GDDY) -4,3 % Fox Corp (FOX) +4,8 % Fortinet (FTNT) -3,3 % Zdroj: Bloomberg

Marek Chudoba
Fio banka, a.s.
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