Reddit Tumbles Again as ChatGPT Citations Shrink

​Reddit (RDDT) extended its decline for a second straight day on Wednesday, falling more than 10% after new data showed its content appearing far less often in responses from OpenAI’s ChatGPT. The move deepens concerns about the platform’s role in the rapidly evolving AI ecosystem, where content visibility and licensing deals are becoming increasingly crucial to long-term revenue growth.

Reddit citations accounted for just 2% of ChatGPT answers on Tuesday, a steep drop from 9.7% a month earlier and down sharply from mid-September’s 14% peak. The data triggered renewed pressure on the stock, which has become highly sensitive to shifts in how its content is integrated across major AI platforms.

AI Licensing Deals Under the Microscope

Despite the decline, Reddit remains the most frequently cited social platform in ChatGPT’s outputs, averaging 4.3% in September—far ahead of LinkedIn’s 0.4%. That prominence has been a core selling point for Reddit as it struck billion-dollar licensing agreements with both OpenAI and Google earlier this year.

Investors are watching closely as Reddit prepares to renegotiate these deals, with discussions reportedly exploring “dynamic pricing” models that would pay the company more if its content is used more heavily. While those talks initially lifted shares in mid-September, the latest citation data has raised doubts about Reddit’s leverage in upcoming negotiations. Analysts caution that OpenAI and Google may ultimately hold more bargaining power.

Advertising Remains the Core Business

Even as AI licensing has attracted investor attention, advertising continues to be Reddit’s revenue backbone. In the second quarter, ad sales surged nearly 84% year over year to $465 million, representing 93% of total revenue. That growth marked Reddit’s strongest performance in three years and underscored the platform’s value as a digital advertising channel despite external uncertainties.

Still, volatility in Reddit’s traffic, often tied to changes in Google’s search algorithms, has weighed on sentiment before. Investors recall similar stock slides after earnings reports in February and May, when concerns about user engagement and traffic flows overshadowed robust revenue growth.

Looking Ahead

The latest decline in ChatGPT references has raised questions about Reddit’s ability to maintain its strategic positioning in the AI economy. If usage trends stabilize, the impact on future licensing revenue may prove limited. But if they continue falling, Reddit could face renewed skepticism around the sustainability of these deals and the valuation premiums tied to them.

For now, the company’s advertising growth offers a cushion, but negotiations with OpenAI and Google will be a pivotal test in the months ahead. Investors will be focused on whether Reddit can secure favorable terms and demonstrate that its content remains indispensable in powering the next generation of AI tools.