NEW YORK, July 22, 2026, 08:13 (EDT)
- Shares of Reddit dropped 6.1% to $174.52 in premarket trading on the NYSE.
- The Wall Street Journal said there are discussions underway to restrict Google’s access to content for use in AI.
- First-quarter figures showed that exposure to audience via search surpassed that from direct licensing.
Reddit stock declined 6.1% to $174.52 during premarket hours on Wednesday. Trading on the NYSE will start at 9:30 a.m. EDT. The drop pointed to a provisional $2.2 billion reduction in the company’s equity value versus Tuesday.
The drop came after the Wall Street Journal reported that Reddit had considered blocking Google’s access to its content for AI purposes. Google is part of Alphabet NASDAQ:GOOGL. According to the report, the discussions were ongoing and no final decision had been reached.
Distribution remains the main concern for investors. Content licensing is accounted for within a minor revenue category. Search plays a role in expanding Reddit’s ad audience.
| Q1 2026 measure | Reported amount | Preliminary share |
|---|---|---|
| Advertising revenue | $624.7 million | 94.2% of revenue |
| Other revenue | $38.7 million | 5.8% of revenue |
| Logged-in daily active uniques | 52.0 million | 41.0% of users |
| Logged-out daily active uniques | 74.8 million | 59.0% of users |
Shares are based on initial estimates from figures provided by the company. Revenue and audience totals are calculated on different bases.
Advertising accounted for 94.2% of sales in the first quarter, while the broader other-revenue category contributed 5.8%. Reddit states this category covers licensing and direct-user products, with user products not considered material.
Users not logged in made up 59.0% of daily active uniques and are less valuable in terms of monetization compared to logged-in users. Reddit noted, however, that overall user growth was in part due to modifications in third-party search.
The data indicate an imbalance. Limiting AI more narrowly may impact a minor revenue stream. A broader disruption in search could influence traffic as well as advertising inventory.
The Journal’s report focused on the use of AI. It did not mention any decision regarding traditional search indexing.
Licensing is partially supported by short-term contract coverage. As of March 31, Reddit disclosed $120.6 million in remaining performance obligations, the majority stemming from long-term content licensing agreements. Of that sum, the company anticipated recognizing $91.6 million over the remainder of 2026.
Market concentration is still elevated. Nearly all licensing contract value was generated from just two partners. Reddit cautioned that future renewals might result in reduced prices or diminished service offerings.
The advertising segment started the period strong. Revenue for the first quarter climbed 69% to $663.4 million. Adjusted EBITDA totaled $266.0 million, accounting for 40.1% of revenue.
Chief Operating Officer Jen Wong stated to Reuters in April that “Our active advertiser count grew 75% year-over-year.” Performance advertising made up over 60% of advertising revenue. Reuters
Reddit dropped 7.2% over the previous week ending Friday, early estimates indicate. Shares rebounded by 2.6% through Tuesday, before premarket trading on Wednesday threatened to wipe out those gains.
Broader markets also experienced pressure. Earlier on Wednesday, Reuters noted Nasdaq 100 futures fell 0.6%. Alphabet is scheduled to announce its quarterly earnings following Wednesday’s market close.
Reddit is scheduled to report quarterly results after the close next Thursday, July 30. The company’s revenue outlook is between $715 million and $725 million. Preliminary consensus from Google Finance stands at $731.0 million, putting it 0.8% above Reddit’s top guidance figure.
Risks: Prices during extended trading hours may fluctuate due to low liquidity. Expanding the search window could hinder user growth. Dependence on two key partners for licensing presents a higher risk when renewals are due.
The upcoming challenge for Reddit is to determine if it can keep AI licensing distinct from search distribution. Earnings results on July 30 will reveal if advertising gains continue to balance out fluctuations in web traffic.
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