# Why Reddit Stock Is Dropping: $3.2 Billion Wiped Off Market Value as Shares Fall 9% > Source: > Published: 2026-07-23 08:18:00+00:00 # Why Reddit Stock Is Dropping: $3.2 Billion Wiped Off Market Value as Shares Fall 9% ## As Reddit reviews its Google AI data agreement, investors are watching how the decision could affect future growth, traffic, and revenue Reddit lost around $3.2 billion in market value after its shares fell about 9% on Wednesday, following reports that the social media platform is reconsidering whether Google should continue accessing Reddit's vast collection of discussions to train artificial intelligence models. The decline came after *The Wall Street Journal* reported that Reddit executives had internally discussed whether renewing the company's AI licensing agreement with Google remains in its long-term interests. The report comes at a crucial time for Reddit as artificial intelligence reshapes how people discover information online. ## Google Partnership Faces Fresh Scrutiny Reddit and Google signed a data licensing agreement in 2024 that reportedly pays Reddit $60 million a year in exchange for access to Reddit's user-generated discussions for AI model training. According to CNBC, the agreement is approaching its expiry date, and both companies are negotiating a possible renewal. However, Reddit's leadership is reassessing the arrangement as [Google's AI-powered search features](https://www.ibtimes.co.uk/alphabet-market-turmoil-ai-leadership-departures-1804437) increasingly answer users' questions directly within search results. That change could reduce the number of people clicking through to Reddit, potentially affecting the platform's advertising business, which depends on user traffic. *The Wall Street Journal* reported that these concerns have prompted internal discussions over whether the current partnership continues to serve Reddit's commercial interests. ## Shares Fall as Investors React The report prompted an immediate reaction in the market. Reddit's share price fell about 9% during trading as investors assessed the uncertainty surrounding the future of one of the company's highest-margin revenue streams. Data licensing has become an increasingly important business for Reddit alongside advertising. While Google remains an important source of referral traffic, Reddit also owns one of the internet's largest collections of authentic human conversations, making its content highly valuable for companies developing AI models. The current negotiations highlight the growing tension between licensing valuable content to AI developers and protecting the traffic that supports online publishing businesses. ## Publishers Face Similar Questions Reddit is not alone in reviewing its relationship with Google. According to *The Wall Street Journal*, several major publishers, including Reuters, *USA Today*, *Politico*, *People,* and *The Economist*, are also reconsidering how they work with Google as AI-generated search responses become more common. The publication cited Semrush data showing that *USA Today*'s flagship national outlet recorded almost a 50% decline in US organic Google search traffic during the 12 months ending June 2026. During the same period, *Politico*'s Google search traffic fell by about 23%, CNN declined by roughly 25%, while *Business Insider* lost more than 85% of its Google search traffic. David Buttle, chief executive of media consultancy DJB Strategies, told *The Wall Street Journal* that the issue is existential for some categories of publishers. Google responded by saying its AI search tools continue to send substantial traffic across the web while helping publishers and creators reach audiences. ## Reddit Continues to Back AI Partnerships Despite the reported internal discussions, Reddit has publicly reaffirmed the importance of its AI partnerships. During a recent earnings call, Reddit Chief Executive Steve Huffman said the company's partnerships with both Google and [OpenAI](https://www.ibtimes.co.uk/us-newspapers-sue-microsoft-openai-ai-training-1805836) remain meaningful and mutually valuable. In addition to Google, Reddit also licenses its content to OpenAI, allowing the company to train ChatGPT using Reddit discussions. There has been no announcement that either partnership will end. Instead, current discussions appear to focus on the commercial terms of future agreements. ## Strong Revenue Ahead of Earnings Reddit continues to report strong financial growth. The company generated $663 million in first-quarter revenue, representing a 69% increase compared with the same period last year. Advertising remained the company's biggest source of income. Data licensing, including agreements with Google and OpenAI, contributed $39 million during the quarter. Reddit is due to announce its second-quarter financial results on 30 July, when investors are expected to seek further updates on negotiations with Google and the company's broader AI strategy. ## A Critical Moment for Reddit Reddit shares have fallen around 27% since the beginning of 2026 and now trade well below their 52-week high reached last September. Wednesday's decline followed reports surrounding the future of Reddit's AI licensing agreement rather than any change in the company's reported financial performance. The discussions underline a wider challenge facing online platforms and publishers. Their content has become increasingly valuable for training AI systems, while those same AI products are changing how users find information across the internet. The outcome of Reddit's negotiations with Google could therefore influence not only one company's future revenue but also how content creators and AI developers work together in the years ahead. © Copyright IBTimes 2025. All rights reserved.