Reddit shares tumbled 5.74% in after-hours trading on Thursday, even as the social media platform delivered second-quarter results that handily exceeded analyst expectations. The company reported earnings of $1.25 per share, beating the consensus estimate of $0.95, while revenue surged 61% to $805 million, well above the $730 million Wall Street forecast.

The selloff reflects a classic "sell-the-news" reaction, fueled by signs of slowing momentum. Revenue growth decelerated to 61% from 69% in the prior quarter, marking the second consecutive quarterly slowdown. Additionally, growth in U.S. daily active unique visitors eased sequentially, and management flagged "choppy" search referrals along with SEO headwinds that weighed on user acquisition.

Profit-taking after a pre-earnings rally also pressured the stock, while lingering uncertainty around the renewal of Reddit's $60 million annual AI content licensing agreement with Google added to investor caution. The post-earnings decline suggests that despite strong profitability and an upbeat third-quarter revenue outlook, the market is focusing on moderating growth and the evolving AI-search landscape.