Reddit RDDT suffered a sharp pull‑back in early October 2025, with shares tumbling nearly 12 % on Oct. 1 and about 14 % over five trading days, after a Promptwatch study found that ChatGPT cited Reddit far less often when its web‑search mode is enabled ; citations dropped from more than 14 % of responses to under 1 % by Sept. 30 , sparking fears that reduced referral traffic from AI tools could hurt engagement and advertising. Analysts noted that ChatGPT makes up a tiny fraction of Reddit traffic, and Piper Sandler’s Thomas Champion said the company’s relationship with Google—its main traffic funnel—remains intact ; Citizen JMP’s Andrew Boone added that concerns over search‑engine optimization are “noise” and highlighted momentum in Reddit’s core advertising business . Trefis attributed the broader decline to concerns about slowing user growth and traffic headwinds tied to changes in Google’s search algorithms and AI‑generated answers , pointing out that Reddit’s valuation is rich with a price‑to‑sales multiple around 12x . Nevertheless, the company’s fundamentals remain strong: Q2 2025 revenue rose over 20 % year‑over‑year and advertising revenue surged 84 % to $465 million , while data‑licensing deals such as a $60 million‑per‑year agreement with Google and may be a similar pact with OpenAI provide a growing revenue stream .
Piper Sandler reiterated an overweight rating with a $290 target and RBC Capital described the AI‑related worries as a “healthy reset” .
My positions attached. Not financial advice.
I would love to hear points against and for $RDDT so we have a healthy discussion from all perspectives.