Why Is Reddit Stock Plummeting Today?

Key Points

• Recent data showed that ChatGPT is referencing Reddit less.

• ChatGPT is an important traffic driver for Reddit, although it pales in comparison to Google Search at this point.

• 10 stocks we like better than Reddit ›

Shares of Reddit (NYSE: RDDT) are falling on Wednesday, down 11.8% as of 3:46 p.m. ET. The drop comes as the S&P 500 and the Nasdaq Composite gained 0.3% and 0.4%, respectively.

The social media platform's stock is still falling after data earlier this week showed a sharp decline in how often ChatGPT references Reddit content in its responses.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

ChatGPT citations fall off a cliff

According to Promptwatch, an AI search engine data service, ChatGPT cited Reddit in just 2% of its answers on Tuesday, a steep decline from August's average of 9.7%.

Reddit remains the most referenced social media platform by the AI assistant, but the decline is concerning. Reddit relies on ChatGPT to drive traffic to its site, which in turn drives ad revenue. A sharp drop like this, if sustained, could spell trouble for the company's bottom line.

Image source: Getty Images.

Reddit is at the whim of others

While a drop in ChatGPT links is concerning, it would not be nearly as harmful as a drop in traffic from Google. The search engine is responsible for driving the lion's share of new traffic, something Reddit needs. The company's stock is priced with a lot of growth baked in; it can't afford for its traffic growth to level off.

This is the main reason I would stay away from Reddit stock: It is dangerously reliant on a single source of traffic. A change in Google's algorithm could halt Reddit's growth, and with a price-to-earnings ratio above 100, that's not something that can happen without the stock plummeting.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $646,567!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,143,710!*

Now, it’s worth noting Stock Advisor’s total average return is 1,072% — a market-crushing outperformance compared to 191% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 29, 2025

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.