Reddit Stock Drops 11.8% Despite ChatGPT, Google Traffic
Reddit's stock price has taken a dip, falling by 11.8% on Wednesday, while broader markets like the S&P 500 and Nasdaq Composite rose slightly. This decline comes despite Reddit's reliance on ChatGPT and Google for traffic, which fuels its ad revenue and growth.
The drop in Reddit's stock price, now at $202.75 with a market cap of $38 billion, may be linked to a decline in ChatGPT's reliance on Reddit for information. On Tuesday, ChatGPT cited Reddit in only 2% of its answers, a significant decrease from its average of 9.7% in August. This could potentially lead to a sustained decline in traffic from these sources, negatively impacting Reddit's bottom line.
Meanwhile, The Motley Fool's Stock Advisor team, known for its impressive track record with an average return of 1,072% that outperforms the S&P 500 by 881%, did not include Reddit in their list of the 10 best stocks to buy now. This absence may also contribute to investor concerns. Reddit's high growth expectations, reflected in its stock price, make it vulnerable to traffic fluctuations.
Reddit's stock price decline on Wednesday, coupled with a decrease in ChatGPT's reliance on Reddit and its exclusion from The Motley Fool's top stock picks, raises questions about the company's future prospects. However, it's important to note that Reddit remains a significant player in the social media landscape, and its long-term performance will depend on various factors, including its ability to diversify traffic sources and maintain user engagement.
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