What Happened?
Shares of online community and discussion platform Reddit (NYSE: RDDT) fell 9.9% in the afternoon session after reports surfaced that OpenAI's ChatGPT was not using the social media platform's data as much as investors had anticipated. Concerns gained traction on the social media platform X, where multiple posts cited data from PromptWatch and Similarweb, suggesting ChatGPT was not heavily drawing on Reddit's content. The market reacted to fears that the company's data licensing partnership was less valuable than previously thought.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 64 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 21 hours ago when the stock dropped 5.5% on the news that a steeper-than-anticipated drop in U.S. consumer confidence raised alarms about future consumer spending. The Conference Board reported its consumer confidence index fell to 94.2 in September, its lowest reading since April. The decline was attributed to growing pessimism among Americans regarding inflation and a weakening job market. This data is particularly concerning for companies reliant on discretionary spending, such as those in online retail, travel, and the gig economy, as reports suggest a bleak consumer outlook could curb spending on non-essential items and services. The survey's Expectations Index, a measure of short-term outlook, has remained below a key threshold that often signals a future recession, adding to investor concerns about the economic landscape.
Reddit is up 25.7% since the beginning of the year, but at $208.59 per share, it is still trading 22.9% below its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $4,135.
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