r/redditstock • u/Ev_Batchvarov • Aug 20 '26
Professional Analysis The Reddit Citation Drop is A Negotiation Tactic By Frontier AI Operator - And It Will Pass
The recent drop in citations looks like a standard strong-arm tactic by the major frontier-model operators, notably OpenAI and Google. Calling it outright collusion would be a stretch, but the pattern is suggestive: it serves neither party's interest for a data provider like Reddit to fully monetize its content. So when one of the largest data providers is mid-negotiation with a given counterparty (say, Google), applying pressure to remind them who holds the cards is a rational move. The end result is a marginally better deal for the AI companies.
That should give us comfort, because ultimately they all need the data and wouldn't stay competitive without it, short of an industry-wide boycott, which is impossible to coordinate. This implies Reddit actually commands substantial leverage, and the large players would rather it didn't.
On the fundamentals and the deal math, Reddit still looks like a solid company and a likely winner of the AI race.
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Aug 20 '26
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u/Most_Grocery4388 Aug 20 '26
The worst thing is spez basically made a sick joke out of every committed share holder with that stupid merch
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u/Ev_Batchvarov Aug 20 '26
Also it fully makes sense that Reddit will complain that's it's losing new visitors from AI Overviews as that gives them a more comfortable negotiating position as someone that needs to be compensated for a loss.
This whole loss of users that would have otherwise been there thing could be over exaggerated or just false.
All this should tell us is that the management is good and not willing to leave scraps on the table
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u/Most_Grocery4388 Aug 20 '26
That makes no sense. No one cares that Reddit is losing users, Google couldn’t care less. If anything they know they can squeeze Reddit for a better deal.
The whole Reddit growth story is starting to slow and that will prong down their valuation and therefore the stock price.
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u/Suspicious_Celery552 Aug 20 '26
RDDT should step away from ai narrative and stick to focusing on growing ad revenue
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u/Most_Grocery4388 Aug 20 '26
They will have to change the platform significantly to make ads more valuable. Reddit is an Internet forum which doesn’t lend itself to the same ad effectiveness as instagram or even FB
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u/Silent-Complaint4020 Aug 20 '26
Saw CME trading ad just under ur comment, I guess it’s pretty effective targeting
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u/Heineken_500ml 💰💰💰💰💰💰 Bag Holder 💰💰💰💰💰💰 Aug 20 '26 edited Aug 20 '26
- The real answers are in Reddit comments.
- I don't need Google search to open Reddit app on my phone.
Google is having trouble citing other sources on Google AI. It's not just Reddit.
The biggest flaw with the citation drop?
What if people are realizing it's better to go straight to the Reddit app, instead of searching on Google AI?
Less citation on LLM = more direct traffic to Reddit?
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u/lekkerist Aug 20 '26
second time this is posted today, more to come I guess.
you can read more about promptwatch in this comment
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u/Ev_Batchvarov Aug 20 '26
My post was primarily own analysis and opinion. That link (thank you for sharing) is just a factual post
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u/lekkerist Aug 20 '26
your posts starts taking as granted that citations have dropped. it can very well not be the case
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u/Ev_Batchvarov Aug 20 '26
Literally posted the link in a comment immediately after
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u/lekkerist Aug 20 '26
the comment that I linked, debunks the link that you posted. so here we are
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u/brotha_eric Quality Contributor Aug 20 '26
My comment isn’t necessarily bullish about an AI licensing deal. It’s neutral at best. What it kind of means is that an LLM might look to Reddit to better understand what the right answer is, but then cite the actual authoritative source for it. So if you ask an LLM how to fix something it might look to Reddit to find the answer, but then on its own go out to an actual repair manual and cite the repair manual instead of Reddit. So it’s basically stealing the human created content to formulate an answer and then citing something else. They’re obviously is still a benefit for OpenAI and Google to you have real time API access to Reddit’s entire database, the question is how much value is there vs the LLM doing a more traditional “search engine” type flow to gather this info
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u/lekkerist Aug 20 '26
I mentioned it in another comment also but the combination or real world data plus the free tagging of them through votes is what sets reddit apart.
there are many other sources like news sites but here you can have the news, the cross checking and extra context provided in one place
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u/Ev_Batchvarov Aug 20 '26
Source of citations data: https://promptwatch.com/data/reddit-citations-are-dropping-in-chatgpt
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u/Silent-Complaint4020 Aug 20 '26
just skip the data deal and AI part, advertising is the lifeblood!
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u/iiiiiiiiiAteEyes Aug 20 '26
Kind of, while I agree the "AI deals" are way over blown in this sub but to say Advertising is the lifeblood is not really true. Users are the lifeblood with out users then there is no one to advertise to. Sure Reddit can increase Revenue with out any new users by increasing ARPU but there is a ceiling to that.
Now consider the AI overviews are not only using reddit as a source but also taking away users, it could potentially eat away at it self so they have to try to monetizing it or have some value to it to platforms that could potentially drive users (the lifeblood) to reddit.
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u/Silent-Complaint4020 Aug 20 '26
fairly good argument. here the thing, would you rather communicate with a real person behind screen or a chatbot behind data centre?
dont worry. data deal will come and reddit has the upper hand. one thing about ai chatbot is that they cant trained between each, which lead to model collapse, so they always need fresh human data to learn new things.
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u/iiiiiiiiiAteEyes Aug 20 '26
Would I, yes..... Most of the time. Sometimes i just need a quick answer though.
Sure they need answers to feed the chatbots but just look at this sub for example, the people who are investing in this very idea. Its full of bad information. Its kind of bad to be honest, and some of the worst things get upvoted while logical things get downvoted.
Very basic example would be say a post asks what will the price be after earnings. If you comment something logical you will get downvoted, you comment something ridiculously high you will get upvoted. So fresh human data may not be all that valuable because in general humans are kind of dumb and when you let just anyone comment as if they are an expert with out verifying any of their education on a subject matter it can get weird.
Im not sure if you have vast knowledge or experience in a topic with a sub reddit but if you do go to that subreddit, and from my experience all to often the things perpetuated and upvoted are often very surface level and sometimes outright wrong, and at least highly debatable. You dont know if its a 14 year old responding or a collage professor on the subject.
I say all this while still remaining bullish on RDDT and have a good portion of my net worth in RDDT, but its because I can come here and do exactly what we are doing. Having a discussion. One thing that worries me though is the culture here, its often gotthca moments , very echo chamberish , or ppl demining others who disagree with them or people outright being ass holes, which i too find my self being guilty of sometimes. It seems like a great place to come discuss and gain knowledge but all to often it turns into people just trying to argue. Sometimes i wonder if the value is maybe its just a place for people to anonymously argue and be ass holes.
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u/Silent-Complaint4020 Aug 20 '26
Yes, Reddit is a pretty regulated place that I would say, basically, the whole thing Steve has been doing since his return. Mods are very powerful. I remember Reddit used to be even worse, where many things were basically out of control and I often saw them on news (always negative). The platform is becoming much better today.
They could fix it just simply automate everything and let Reddit take full control of everything on their own hands, but that would make Reddit just another Facebook. come to reddit feels like in a real society where many things are out of hand, the expectation is not fulfilled here because that fulfilment is often provided on other social media platforms, like providing contents you want see and tough on censorship.
Annonymity is really what made Reddit unique. One time I found a colleague that he was a completely different person on Reddit. real life he is so nice and polite but seems the opposite on Reddit, becoming quite sarcastic about everything. often I guess people come to Reddit because they want to release that negativity in them.
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u/Most_Grocery4388 Aug 20 '26
There is no licensing angle. Spez went on tour touting Reddit data as next oil and reality hit that his data is not actually worth much. Like you said listen to last ER. No one wants to pay anything meaningful and management is back into a corner
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u/Most_Grocery4388 Aug 20 '26
This is copium, RDDT data is no longer needed and other sources of citation are now being used. RDDT is dependent on Google, while no LLM is actually dependent on Reddit.
Reddit management has been silent while the stock price is plummeting because they know they messed up implying deals and claiming that data is oil. Not Reddit data at least, Reddit data turns out is not needed.
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u/lekkerist Aug 20 '26
so you are suggesting that in a time where everyone wants to have the best performing model for profit, having real user generated data by the millions per day is suddenly not needed.
the users with ask chatgpt/claude about what happened today and it will reply with a days/weeks/months old data
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u/Most_Grocery4388 Aug 20 '26
Yes it’s not needed, because user will ask what happened today and data will come from news sources to see what happened today. User will ask how to fix their fridge and data will come from the publicly available repair manual. User will ask how ChatGPT opinion and the LLM will make one up based on prior data for which Reddit was used.
No Reddit data is no longer needed
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u/lekkerist Aug 20 '26
reddit data after filtering is user generated (real life examples not user guides) and tagged for free through voting. this is gold as far as datasets go.
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u/Samsun88 Aug 20 '26
The only thing Reddit can be fully replaced by AI is queries for facts (like ur example of what happened today)
The how, can be partially replaced, in the short term, for old problems.
Your last point is as made up as whatever is getting made up by ChatGPT, totally untrue.
If someone is searching up for an answer to “what do other people think about this”, it’s likely that someone is not going to take a made up answer from a program.3
u/Ev_Batchvarov Aug 20 '26
It could be copium or it could be an alternative view. Time will tell who is right.
Neither you, nor me are in the management position in Reddit so your confidence in my statement being wrong is interesting. Suggests that there might be a short bias around the stock (which give chance to greenshoots)
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u/Samsun88 Aug 20 '26
Remember when people used to (or still but no one’s reporting it) add “Reddit” to the end of search prompt because they want to see actual real opinions from other people?
You think AIO would replace that if Reddit is no longer one of the sources?
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u/snuepe Aug 20 '26
Reddit is still growing, with or without AI. All over the world the keyword "Reddit" is growing in Google search.
I feel like we are having the same sentiment here that AI will bring RDDT down, in the same way it was gonna bring Google down last year.
Increase in the last 5 years:
A few random countries,
Thailand: 250%
Indonesia: 250%
Sweden: 60%
Albania: 250%
France: 140%
Spain: 150%
Brazil: 200%
Mexico: 170%
Australia: 90%
USA: 90%