RDDT Stock Plunges on S&P Exclusion Amid AI Deal Optimism

RDDT stock took a hit on Friday, falling 6% after hours due to its exclusion from the S&P 500 index. Despite speculation that it would be included, Marvell Technology Inc (MRVL) and Flex Ltd (FLEX) were added instead.

The drop in shares comes as Wells Fargo analysts are turning more constructive on Reddit's content licensing agreements with Google parent Alphabet and OpenAI. They forecast combined annual revenue from the deals could surge to $550 million upon renegotiation, more than quadrupling the current run rate of roughly $130 million.

Wells Fargo's updated framework highlights Reddit's data as well-positioned for the shift toward AI inference and agentic applications. However, they remain skeptical that Alphabet and OpenAI will offer meaningful additional traffic referrals back to Reddit's platform.