Reddit stock falls for second day as references to its conte

Reddit stock falls for second day as references to its content in ChatGPT responses plummet Reddit (RDDT) stock fell as much as 8% in early trading Wednesday, extending a 5% decline from the previous trading session amid new data that showed the use of its content in leading AI chatbot ChatGPT had plummeted in mid-September.
Reddit content was cited in just 2% of ChatGPT responses on Tuesday, much lower than the 9.7% of ChatGPT responses that cited Reddit the previous month, according to data from AI search engine tracker Promptwatch. At its peak in September, Reddit was cited in more than 14% of ChatGPT answers.
Still, Reddit was the top social platform cited by the leading AI chatbot, with its content surfacing in 4.3% of ChatGPT's responses on average in September. Meanwhile, LinkedIn, the second-most-cited social platform, was referenced in only 0.4% of ChatGPT's answers during the month.
Reddit is often used as a social media version of a search engine, with users frequently appending "reddit" to online queries when looking for advice or instructions. Google (GOOG, GOOGL) still dominates "traditional" online search. That means Reddit, like other search resources, faced a potentially existential threat with the rise of AI chatbots, beginning with the launch of ChatGPT in late 2022.Reddit has circumvented that threat of displacement by inking billion-dollar data licensing deals with ChatGPT maker OpenAI and Google to use its content for their AI models. Reddit has also launched its own AI search and advertising tools.In mid-September, Bloomberg reported Reddit was also looking to strike its next data licensing agreement with Alphabet-owned Google and was set to discuss dynamic pricing for that deal and its partnership with OpenAI. Such dynamic pricing would allow Reddit to be paid more, as its content is used more often in the companies' AI answers, Bloomberg wrote, citing unnamed executives. The news sent shares surging in mid-September.
Outside of Reddit's content-sharing deals, investors have closely watched the site's own web traffic, with the platform's daily active users susceptible to changes in Google Search's algorithm.
Following quarterly reports in February and May, the stock fell as investors worried over volatility in Reddit's traffic due to the issue.
Still, the bulk of Reddit's revenue comes from advertising on its site. That segment saw revenue jump nearly 84% to $465 million in the social media platform's second quarter, accounting for 93% of the company's total revenue for the three months ending June 30. During that period, Reddit saw its fastest revenue growth in three years.