Reddit shares tumbled 10.36% in a 24-hour plunge on Thursday, as the social media platform's second-quarter results failed to impress investors despite a significant earnings beat.

The decline was triggered by a classic "sell-the-news" reaction after the company reported earnings of $1.25 per share, far exceeding the consensus estimate of $0.95, and revenue surged 61% to $805 million. However, investors focused on slowing growth in U.S. daily active users, which slipped to 53.2 million from 53.5 million in the prior quarter, and a deceleration in revenue growth from 69% in Q1 to 61% in Q2. Management flagged choppy search-referral traffic and SEO headwinds, while lingering concerns about the potential non-renewal of a $60 million annual AI content licensing agreement with Google and the disruptive impact of AI overviews on user traffic added to the negative sentiment.

The stock's sharp decline reflects profit-taking after a pre-earnings rally, as well as broader market anxiety about Reddit's ability to sustain user growth in an AI-driven internet landscape.