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Reddit stock is tumbling and ChatGPT may be to blame

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October 1, 2025
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Reddit stock is tumbling and ChatGPT may be to blame
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Mentions of Reddit Inc (NYSE: RDDT) on the artificial intelligence (AI) chatbot, ChatGPT, have dropped sharply – and investors are reacting.

According to Promptwatch, Reddit content appeared in 2.0% of ChatGPT responses on Tuesday – down from nearly 10% a month earlier and over 14% at its September peak.

Reddit stock is extending losses following the Promptwatch update this morning, and is now down 10% in the session and 23% versus its year-to-date high in September.

Why fewer ChatGPT mentions hurt Reddit stock

RDDT stock is tumbling due to fewer ChatGPT mentions as the news is making investors reassess the platform’s role in the artificial intelligence ecosystem and its exposure to shifting usage trends.

Reddit’s value proposition has increasingly hinged on its relevance in the AI era.

The NYSE-listed firm has inked lucrative licensing deals with OpenAI and Google to supply training data for LLMs – positioning itself as a key content source for generative artificial intelligence.

But Promptwatch’s latest data suggests Reddit Inc’s visibility within ChatGPT answers is waning.

That’s problematic for a company whose monetization strategy includes dynamic pricing – where more frequent AI citations could translate into higher payouts.

A sudden drop in mentions raises questions about Reddit’s long-term leverage in these partnerships and whether its content remains central to AI-generated search and advice.

Should you buy RDDT shares on the pullback?

Despite a concerning update from Promptwatch, Reddit’s fundamentals remain compelling.

The company’s advertising revenue surged 84% year-over-year to $465 million in fiscal Q2 (fastest growth in three years) – making up roughly 93% of its overall sales.

RDDT is diversifying with its own AI-powered search and ad tools as well, which could help offset reliance on external platforms.

While user traffic remains sensitive to Google’s algorithm changes, the firm’s community-driven content still holds unique value.

Valuation-wise, Reddit shares’ pullback may offer an attractive entry point for long-term investors who believe in the platform’s role in both social and AI-driven discovery.

What the ChatGPT driven decline really means

Reddit stock’s weakness underscores how intertwined tech platforms have become with AI usage metrics.

A decline in ChatGPT citations doesn’t necessarily mean RDDT influence is fading – but it does highlight the fragility of investor sentiment in the artificial intelligence era.

As AI platforms evolve and diversify their data sources, even minor shifts in visibility can trigger outsized market reactions, especially for businesses monetizing their relevance through licensing deals.

Investors could also take heart in the fact that Wall Street remains bullish as ever on Reddit shares for the next 12 months.

The consensus rating on RDDT stock currently sits at “overweight” – with price targets going as high $303, indicating potential “upside” of nearly 45% from here.

That said, Reddit Inc does not currently pay a dividend as of writing, though.

The post Reddit stock is tumbling and ChatGPT may be to blame appeared first on Invezz


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