(Bloomberg) -- Reddit Inc. shares suffered their worst intraday drop ever after the social media company failed to announce any new data licensing agreements in its latest earnings report, disappointing investors who are hoping to see a shift in revenue streams.
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Reddit's ads business is the company's main source of revenue, but investors increasingly are hoping to see the mix shift to data deals for artificial intelligence training. The company's repository of user posts has made it a popular place for marketers to reach consumers in online communities where they're already discussing a particular topic or company.
That library has also drawn interest from AI firms seeking new training data, and Reddit has secured licensing deals with OpenAI and Alphabet Inc.'s Google worth hundreds of millions of dollars.
Reddit is already exploring a new potential deal with Google, Bloomberg reported last September, though the company didn't announce a new arrangement Thursday as some analysts had hoped. Reddit is actively "talking to our partners" and "thinking very consistently about this," Chief Operating Officer Jen Wong said in an interview.
Chief Executive Officer Steve Huffman, speaking on a call with investors, said the data licensing opportunity is "an expanding marketplace" that goes beyond Google and OpenAI. He declined to comment on the status of new agreements.
The shares plunged as much as 24% to $135.82 in New York on Friday, their steepest intraday decline since the company went public in 2024. The stock has dropped 40% so far this year.
As Reddit negotiates new deals, it's thinking not just about licensing fees, but also how to bring new users to its products. For example, when a chatbot supplies an answer drawn from Reddit data, executives want to be able to show users that Reddit is the source of the information and direct them to the site.
"The landscape has changed so much over the last couple of years," Wong said. "We want to be very thoughtful here on how to maximize value."
The share drop overshadowed a revenue forecast for the current quarter that beat Wall Street estimates. Revenue in the period ending in September will be $860 million to $870 million, Reddit said Thursday in a statement, higher than the average analyst estimate of $829.4 million, according to Bloomberg-compiled data. Second-quarter sales also surpassed expectations, jumping 61% to $805 million, driven mostly by advertising.