Reddit Shares Sink Nearly 9% Amid AI Data Licensing Concerns

Reddit Inc. (RDDT) shares tumbled nearly 9% in morning trading on Monday after a report raised doubts about the future of a key data-licensing agreement with Alphabet's Google. The sell-off was triggered by news that Reddit has internally discussed blocking Google from using its vast repository of user content to train artificial intelligence models.

AI Revenue Stream at Risk

The uncertainty stems from a Wall Street Journal report detailing Reddit's internal deliberations. This has rattled investors because the company's AI monetization strategy is a central pillar of its growth narrative. A key component of this strategy is a data-licensing deal with Google, signed in 2024 and valued at an estimated $60 million per year.

Any failure to renew or expand this agreement would not only impact a significant revenue source but could also undermine the broader investor thesis that Reddit's user-generated content holds premium value for AI developers. The ability to secure and grow such licensing deals has been a primary catalyst for the stock's previous gains.

Insider Sales Add to Pressure

Compounding investor concerns were recent stock sales by top executives. Regulatory filings show that on July 15:

Ad

• CEO Steve Huffman sold approximately $3.56 million worth of shares.
• COO Jennifer Wong sold roughly $7.75 million in stock.

This insider activity had already begun to weigh on market sentiment prior to Monday's news. The broader market offered little support, with the S&P 500 trading flat and the Nasdaq slightly lower, providing no tailwind for the stock.

Focus Turns to Upcoming Earnings

The report introduces a new layer of risk for investors ahead of Reddit’s second-quarter 2026 financial results, which are scheduled for release after the market closes on July 30. The market will be closely watching for any management commentary on the status of its AI data partnerships.

Despite the licensing uncertainty, analysts at Jefferies recently noted a positive sign for the company's core business, highlighting that Reddit continued to gain market share in social media advertising during the second quarter.