Let me look up the latest news and price action for Reddit (RDDT) to understand what's happening.The sell-off today is driven by a convergence of factors. Here's the breakdown:

1. Google AI Licensing Deal in Jeopardy (Primary Catalyst)

The biggest headline: Reddit is reportedly considering blocking Google's access to its content for AI training as their ~$60M/year licensing deal nears expiry. The Wall Street Journal reported the negotiations are ongoing but no final decision has been reached. RDDT fell as much as 6.1% in premarket on the uncertainty, erasing roughly $2.2 billion in market value. Some view Reddit's threat as a bargaining tactic to push for usage-based pricing, but the risk of losing the Google deal is real.

2. Institutional Selling

Allspring Global Investments reportedly slashed its RDDT position by nearly 60%, adding heavy selling pressure. This follows earlier concerns after the COO's recent multimillion-dollar share sale, reinforcing unease about near-term valuation.

3. Broader AI-Tech Selloff

RDDT is getting hit alongside the broader pullback in AI-linked tech names. With a beta near 2.0, the stock amplifies sector moves in both directions, and today's risk-off tape is no exception.

4. Alphabet Earnings Tonight

Timing adds extra pressure. Alphabet reports Q2 after the close today, and any commentary on content licensing costs or AI data strategy could directly move RDDT. Options traders are pricing in outsized moves across big tech.

Bottom line: The Google AI licensing uncertainty is the headline driver, compounded by institutional exits and macro tech weakness. This looks more like hardball negotiation tactics than a breakup — but the market is pricing in the risk until clarity emerges, potentially as soon as Alphabet's earnings call tonight.

Good catch — the $60M is indeed small relative to Reddit's revenue, so the real concern runs deeper. Let me check how significant the Google traffic relationship actually is.You're exactly right to question that. Here's why the $60M is a red herring and what the market is actually worried about:

The $60M Data Deal vs. The Real Dependency

Reddit's trailing revenue is roughly $1.4B (Q1 2026 annualized), so $60M is about 4% of revenue — not nothing, but not existential. The deal was purely for data licensing (training Google's AI models) and gave Reddit access to Google's AI tools.

The real risk is traffic, not the $60M check.

Roughly 60% of Reddit's traffic comes from Google organic search. Only about 30-32% is direct. That's the dependency. The $60M AI licensing deal and Google's search algorithm are effectively intertwined — if the relationship sours, the risk isn't losing $60M in licensing fees, it's losing the algorithmic traffic that drives the majority of Reddit's user growth and ad revenue.

The AI Irony

There's a paradox at the heart of this: Google's AI Overviews increasingly answer user questions by summarizing Reddit content directly in search results. When that happens, users get the answer without clicking through — Pew Research found clicks drop to just 8% when AI summaries appear. Reddit is the most-cited domain in those AI answers, yet it's getting cannibalized on traffic.

Reddit's management has acknowledged this tension. They want a new deal structure where: - Pricing is usage-based, not a flat $60M — they believe their data is worth far more given its centrality to AI answers - Google actively helps convert logged-out visitors into registered users, not just scrape content into AI summaries

Revenue Context (TTM)

So the $60M deal is a rounding error on revenue. But if blocking Google means a 30-50% traffic hit? That's a fundamentally different conversation. This is why the stock is reacting — not to $60M, but to the signal that the symbiotic Google relationship may be fraying at a moment when Reddit has never been more dependent on it.

No — the $60M deal and the search traffic are legally separate.

The $60M deal is a straightforward commercial contract: Reddit sells its API data to Google for AI training. In return, Reddit gets cash plus access to Google's AI models for internal tools. That's it. There is no traffic guarantee written into it.

The search traffic is purely organic — driven by Google's algorithm independently ranking Reddit pages highly in search results. Reddit didn't pay for it, and Google isn't contractually obligated to send it. Google's algorithm simply decided Reddit content is what users want to see, and since mid-2023 it has been surfacing Reddit more and more aggressively.

So why are they linked in the market's mind?

Even though the two are legally separate, they're practically entangled. If Reddit blocks Google's crawlers from accessing its content for AI training, it raises an awkward question: is Reddit also willing to restrict Google's access to its content for search indexing? Cutting off the $60M is easy; cutting off the 60% of traffic is not, but the market fears the relationship could deteriorate broadly.

Reddit's leverage in the negotiation is real — their data is genuinely valuable to Google's AI — but it's a game of chicken where Reddit has far more to lose if things go wrong. The market is pricing in that risk today.