TLDR
- Reddit stock fell 9% after reports it may end Google’s access to its content for AI training
- Reddit and Google have a $60M/year deal expiring soon, with renewal talks ongoing
- Ad revenue rose 74% year-over-year in Q1, making up 94% of total revenue
- Wall Street has an average price target of $226.29, implying ~34% upside
- RDDT stock is down roughly 27% since the start of 2026
Reddit stock dropped 9% on Wednesday after the Wall Street Journal reported the company has internally discussed cutting off Google’s access to its content for AI training.
Reddit and Google signed a $60 million-a-year deal in 2024 giving Google the right to train its AI models on Reddit’s content. That deal is nearing its end, and the two sides are now in talks about renewing it.
The problem? Google’s AI-powered search responses are reducing traffic to third-party sites, and Reddit’s leadership is questioning whether the deal still makes sense.
Reddit is not the only one feeling the squeeze. USA Today’s organic Google search traffic from U.S. readers fell nearly 50% in the twelve months ending June 2026, according to Semrush data. Politico fell 23%, CNN dropped around 25%, and Business Insider lost more than 85%.
“This is existential for some categories of publishers,” said David Buttle, CEO of media consulting firm DJB Strategies.
Google pushed back, saying its AI search tools direct traffic across the web and support audience growth for publishers.
Reddit also holds a separate data licensing deal with OpenAI. CEO Steve Huffman addressed both on a recent earnings call, calling them “very meaningful” and saying the relationships are mutual.
Ad Business Keeps Delivering
Despite the Google noise, Reddit’s advertising engine continues to perform. Q1 ad revenue rose 74% year-over-year and accounted for 94% of total revenue. Overall Q1 revenue hit $663 million, a 69% jump from a year earlier.
Reddit Max, the company’s AI-powered ad campaign tool, is helping drive that growth. Advertisers using it reported 17% lower cost per action and 25% more conversions on average. Adjusted EBITDA margin expanded from 29.4% to 40.1% year-over-year.
Data licensing, which includes the Google and OpenAI deals, brought in $39 million in Q1. Q2 guidance points to revenue growth of around 44%.
Valuation and What Analysts Think
Reddit currently trades at around $168.78, putting it at roughly 10x 2026 expected sales and about 34x forward earnings. That’s a premium to Meta at 19x and AppLovin at 25x, though Reddit’s growth rate gives that premium some backing.
Some analysts see a more comfortable entry point in the $140–$150 range, which would bring the forward multiple down to 28x–30x.
Wall Street’s average price target sits at $226.29, based on 13 Buy ratings and eight Holds — implying about 34% upside from current levels.
Reddit is scheduled to report Q2 earnings on July 30. The stock is down approximately 27% since the start of 2026.
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