"A fast-growing advertising business and strong user growth have powered that surge. But Reddit's rally has been cool on multiple occasions this year by concerns that it is too reliant on referrals from Google for site traffic. That could leave it vulnerable to swings in user growth, particularly as AI-powered chatbots such as ChatGPT and Google's Gemini directly answer a greater share of people's online queries."
"Reddit Stock's Slide Reddit stock is down more than 9% at 209.10 on the stock market today. That pushed shares below Reddit's 50-day moving average for the first time since late May. That adds to a recent slide for the stock. Shares have pulled back by more than 35% since reaching an intraday record high of 282.95 on Sept. 18."
"data showing declining DAU's (daily active users) on a (trailing 30-day average) is making the rounds on social media this morning and weighing on the stock, along with other third-parties flagging that Reddit's citation share on ChatGPT has gone down significantly recently."
Reddit shares fell sharply, dropping below the 50-day moving average after data pointed to declining daily active users and lower citation share on ChatGPT. Research from PromptWatch found fewer recent citations of Reddit by ChatGPT, though Reddit remains a leading source for the bot. The company experienced rapid stock gains driven by advertising revenue growth and user expansion, but concerns persist about heavy reliance on Google referrals and the risk that AI chatbots will divert direct user engagement. Conflicting data on AI-driven referrals has left at least one analyst neutral on the stock amid recent volatility.
Read at Investor's Business Daily
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