Reddit (RDDT) stock dropped sharply on Tuesday, falling as much as 9.15% in morning trading to a session low of $166.87, before recovering slightly to around $169.59.
The sell-off was triggered by a Wall Street Journal report revealing that Reddit executives have held internal discussions about blocking Google from accessing its content for AI training purposes.
At the center of the story is Reddit’s $60 million-per-year data-licensing deal with Google, originally signed in 2024. The agreement lets Google train its AI models on Reddit’s large library of user-generated content.
The relationship has grown complicated. Google’s “AI Overviews” feature — which answers search queries directly on the results page — has been eating into Reddit’s referral traffic, reducing click-throughs to the platform.
That tension has put the contract renewal in doubt, and investors didn’t like it. Reddit’s AI licensing revenue has been a key part of the bull case for the stock, so any threat to that income stream hits the valuation hard.
The licensing news wasn’t the only headwind. CEO Steve Huffman sold approximately $3.56 million worth of stock on July 15. COO Jennifer Wong sold around $7.75 million on the same date. That insider activity had already been weighing on sentiment heading into Tuesday’s move.
Neither the broader market nor sector offered much cover. The S&P 500 was essentially flat on the day, and the Nasdaq edged lower — no help for a high-multiple internet name like Reddit.
Reddit is down 27.8% year-to-date. At recent prices around $169, the stock is trading roughly 35.5% below its 52-week high of $270.71, hit in September 2025.
Reddit reports Q2 2026 results after market close on July 30. The licensing uncertainty now adds a new variable for investors trying to model the data-revenue line going into that print.
It’s worth noting that Google isn’t the only party with leverage here. Reddit’s vast pool of human-generated content is increasingly valuable in an environment flooded with AI-generated text. OpenAI and other AI firms are also potential licensing partners — and Google has reason to keep Reddit’s data away from its competitors.
On the advertising side, Jefferies recently flagged that Reddit continued to grow its share of the social media ad market in Q2, a sign the core business remains on track.
Reddit has logged 52 moves of 5% or more over the past year, so volatility is nothing new for this stock. The session low on Tuesday was $166.87.
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