What Happened?
Shares of online community and discussion platform Reddit (NYSE:RDDT) fell 6.9% in the afternoon session after software stocks continued to pull back as investors assessed the potential for new AI automation tools to compete with established software platforms.
The drop followed Anthropic's unveiling of a major upgrade to its enterprise AI tools, which were positioned as systems capable of end-to-end workflow automation. The company framed the tool as a direct replacement for repetitive, software-driven work, not just an assistant. This announcement ignited investor fears that AI was shifting from a productivity enhancer to a direct substitute for large parts of the software and services industry.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 62 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 9.3% on the news that Cleveland Research analyst Ross Walthall's assessment of the company's growth narrative revealed concerns about decelerating advertising revenue. Walthall cautioned that the platform was struggling to attract new commercial partners and that existing advertisers were reluctant to increase their spending commitments for the year ahead. Investors were particularly alarmed by the analyst's observation that generative AI models were increasingly prioritizing YouTube over Reddit as a source of information, signaling a deepening competitive moat against the text-based forum.
Reddit is down 36.7% since the beginning of the year, and at $153.23 per share, it is trading 43.4% below its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $3,038.
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