Reddit built a surprisingly tidy business out of something most platforms give away for free: its users’ words. Now that business model is wobbling, and the stock market noticed immediately.

Reddit shares fell roughly 6% in premarket trading on July 22, 2026, after the Wall Street Journal reported that renewal talks for its AI data-licensing deal with Google have hit turbulence. The report indicated Reddit executives are weighing whether to restrict Google’s access to the platform’s content altogether, a negotiating posture that signals these talks are anything but routine.

What the deal is actually worth

The original Google agreement, signed in February 2024 just ahead of Reddit’s IPO filing, was valued at approximately $60 million per year. That gave Google the right to use Reddit’s enormous archive of human-written, human-debated content to train its AI models.

Reddit also has a separate licensing arrangement with OpenAI, estimated at around $70 million annually. Together, those two deals contributed roughly $140 million in AI licensing revenue in 2025.

The Google deal is now approaching renewal, and both sides appear to disagree sharply on what it should be worth the second time around.

Some analysts have floated the idea that Reddit could push for a 5x to 8x fee increase, on the theory that Reddit’s data has only become more valuable as AI companies have grown more dependent on authentic human-generated text. Analysts have expressed skepticism toward those aggressive projections, though they do acknowledge Reddit holds more negotiating leverage now than it did in early 2024.

What this means for Reddit’s investment case

The 6% premarket drop tells you how concentrated Reddit’s bull thesis has become around AI licensing revenue. When a single contract negotiation can move the stock that sharply, it means the market has priced in a fairly optimistic renewal outcome.

If Reddit successfully renegotiates the Google deal at a higher rate, or shifts toward a dynamic or performance-based pricing structure that better captures its value as AI usage grows, the long-term trajectory for this revenue line improves materially.

The risk scenario is starker. If talks break down and Reddit restricts Google’s access, the $60 million annual revenue line disappears. Combined with the OpenAI deal, Reddit would still have $70 million in AI licensing revenue, but the narrative of Reddit as a scalable AI data business takes a serious hit.