Shares of Reddit (NYSE:RDDT | RDDT Price Prediction) are down 9% to $169.48 in Wednesday afternoon trading following a Wall Street Journal report that the company is weighing whether to cut off Alphabet‘s (NASDAQ:GOOGL) Google from using Reddit content to train artificial intelligence models.
The move leaves Reddit stock 26% lower year to date (YTD), and extends a rough stretch that included a 15% pullback over the past week. Reddit’s market capitalization sits near $32.3 billion.
WSJ Report on Google Renewal Sparks Selling
According to the Wall Street Journal, Reddit is considering whether to block Google’s access to its content as the two sides negotiate a renewal of their 2024 data-licensing agreement, estimated at about $60 million per year. No final decision has been made.
The core issue is traffic cannibalization. Google’s AI Overviews answer user queries directly on the search page, reducing the referral clicks Reddit relies on to sell ads. Reddit executives reportedly want usage-based fees on the next deal.
The bullish read is that Reddit’s human-conversation data is among the most-cited sources feeding AI answers, and the company also licenses data to OpenAI, giving it real pricing leverage in a renewal. The bearish take is that if AI Overviews keep siphoning clicks, other publishers including USA Today, Politico, Reuters, The Economist, and People Inc. are also reassessing their Google relationships, and Reddit’s ad engine could weaken over time.
Peers, the ETF Wrapper, and Insider Noise
The read-through to social-media advertising rivals is muted so far. Meta Platforms (NASDAQ:META) stock is trading at $629.44, while Snap (NYSE:SNAP) shares sit at $4.51 and are down 43% YTD. If Reddit’s referral base erodes, Meta Platforms and Snap could benefit competitively for the same digital ad dollars, though that is a potential risk rather than a reported outcome.
Alphabet stock is little changed, up less than 1%, as its sheer scale absorbs the headline. The Global X Social Media ETF (NASDAQ:SOCL) holds Reddit, Meta Platforms, Snap, and Alphabet, but the fund is heavily weighted toward international names and Reddit is only 7% of net assets, so a Reddit-specific stumble barely moves the ETF. That said, the fund is a narrow, volatile, single-theme vehicle with real concentration risk.
On the ownership side, Allspring Global Investments Holdings disclosed a reduction in its Reddit stake, and COO Jennifer Wong recently sold Reddit stock. The Wong sale was executed under a pre-arranged Rule 10b5-1 trading plan, which is routine and not a directional signal.
Fundamentals and Sentiment Still Look Strong
Reddit’s underlying business remains healthy. The company’s Q1 FY2026 revenue grew 69% year over year (YoY) to $663.41 million, EPS came in at $1.01 versus a $0.56 consensus, and management guided Q2 revenue to $715 million to $725 million. CEO Steve Huffman has called the platform “fuel” for AI.
Reddit-community sentiment on RDDT stock is actually running bullish, with a sentiment score of 67, and one top post argued the threat is “extremely bullish” as a negotiating posture. The RDDT analyst target price still sits at $227.30, well above today’s level.
What to Watch Next
Alphabet reports its Q2 results after Wednesday’s close, and any management commentary on content and licensing costs could move both Reddit stock and Alphabet stock. Investors can watch for whether either company confirms or denies the WSJ report, and whether the standoff surfaces on Reddit’s own Q2 call. If a richer renewal lands, today’s selloff may look like an overreaction; if Google’s AI Overviews keep draining clicks, the ad thesis needs a rethink.
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