Reddit (RDDT) reports Q2 2026 results tonight after the close. The stock is down nearly 25% this year. The business is not.
In Q1 2026, Reddit posted revenue of $663 million — up 69% year-over-year. Ad revenue grew even faster at 74%. Daily active users hit 126.8 million, up 17%. Free cash flow reached $311 million on capex of just over $1 million. That is not a typo. The company spent barely anything to generate that cash. Gross margins run above 90%.
So why is the stock down?
Part of it is valuation anxiety. Reddit trades around 50x trailing earnings, and any hint of deceleration gets punished hard in this environment. The other part is a specific worry the market hasn’t fully resolved: AI licensing renewals.
Here is the thing most people skip over. Reddit’s current agreements with Google and OpenAI — worth roughly $60 million and $70 million annually, respectively — renew in 2027. CEO Steve Huffman has been explicit that he wants to move from fixed-rate deals to dynamic pricing, reflecting how dramatically the value of Reddit’s data has changed since those original contracts were signed. Some estimates put the potential renewal value north of $2 billion annually. Others are far more conservative. That gap in expectations is one reason the stock has been volatile.
Tonight, the market gets a Q2 reading. Analysts expect revenue of roughly $744.9 million, up about 49% from last year, and EPS of $0.99 — which would represent 120% year-over-year earnings growth if it hits. Reddit has beaten EPS estimates in five consecutive quarters. Last quarter, it posted $1.01 versus a $0.56 estimate — a 79% upside surprise. Polymarket’s real-money crowd currently prices in a 93% probability of a beat tonight.
Slight tangent, but it matters: Reddit’s content has a property that most digital advertising platforms can’t replicate. It is structured human conversation, indexed by interest and intent, going back nearly two decades. Every AI model that wants to understand how people actually think and talk needs it. That is not a commodity. As AI labs compete for training data, Reddit’s leverage on renewals only increases — assuming user engagement stays healthy.
The Q1 guidance for Q2 was $715 million to $725 million in revenue and $285 million to $295 million in adjusted EBITDA. If Reddit lands above that range tonight — which its beat streak suggests it might — the AI licensing premium gets harder to ignore at this price.
What bears watch: user growth was described as somewhat disappointing in Q1 by at least one fund manager, and Meta is building a competing forum product that could pressure engagement over time. Advertising still accounts for roughly 95% of revenue, which means any slowdown in ad demand hits fast.
The consensus price target sits around $227 to $230, implying 30% upside from current levels. Eighteen analysts rate it Buy, twelve Hold. The range of outcomes tonight is wider than most stocks reporting this week.
Watch for: Q2 revenue versus the $715–725M guide, any update on AI licensing deal timelines, daily active user growth (the market is sensitive here), and EBITDA margin trajectory. The guidance for Q3 will be the number that moves the stock more than the Q2 result itself.
The business and the stock have been telling two different stories all year. Tonight is when one of them has to give.