Reddit stock pared its losses for the day following a report that it's in "early talks" with Google parent Alphabet on a new content-sharing agreement. The social media platform plans to discuss new deal structures for its content with both Google and OpenAI, according to Bloomberg.
Reddit stock has rallied nearly 45% in the past three months, helped by strong Q2 results posted on July 31. Also, the stock is up more than 600% from its March 2024 IPO price.
A fast-growing digital advertising business has been the top factor for Reddit's strong stock performance. But the company has also unlocked new revenue by licensing the content on its platform to developers of AI algorithms. That includes a reported $60 million per year deal with Google last year and an OpenAI agreement with similar terms.
Those deals were classified within an "Other" sales category that analysts project will contribute $141.7 million in revenue for Reddit in 2025, about 7% of its projected annual sales, according to FactSet.
Reddit is looking for new deals that "allow for dynamic pricing, where the social platform can be paid more as it becomes more vital to AI answers," according to Bloomberg's report, which cited unnamed executives. Reddit declined to comment when contracted by IBD.
Reddit Stock Pares Wednesday Losses
On the stock market today, Reddit stock is down 3% at 258.63 in recent trades. That's up from session lows near 249. Shares pared some of their losses following Bloomberg's report on Reddit.
After a 6% gain last week, Reddit stock remains solidly above its 21-day moving average.
