Reddit (NYSE: RDDT) shares are crashing this morning after an Adweek report said YouTube has officially overtaken the forum social media platform as the primary source of data for AI models.
Investors are bailing on RDDT stock also because a senior Cleveland Research analyst warned the company’s revenue growth might be slower than previously expected in 2026.
Following today’s decline, Reddit stock is down more than 20% versus its year-to-date high.
Why YouTube news warrants selling Reddit stock
For a long time, Reddit was the “king of AI training” because its text-heavy format was easier for machines to read.
However, AI models (like Gemini and GPT-5) have become so good at processing video transcripts and “seeing” video content that they are now using YouTube more frequently than Reddit.
It’s a seismic shift – and a negative one at that – for RDDT shares since their “premium valuation” is based mostly on the idea that the company sits on a “goldmine” of human conversation that AI firms must pay for.
But if YouTube (owned by Google) is now seen as a superior or more “cited” source for AI, it devalues Reddit’s data in the eyes of investors.
Why Cleveland Research is bearish on RDDT shares
Reddit shares are slipping on Jan. 27 also because analyst Ross Walthall’s research note offered a “reality check” on the high-growth narrative that’s been fuelling them recently.
It essentially shifted the sentiment from “unlimited growth” to “moderating growth” for 2026.
In his report, Walthall highlighted a slowdown in new advertisers joining the platform.
While small agencies remain optimistic, larger US clients have reduced forecasts and have less conviction about scaling up their spending on RDDT this year, he added.
Moreover, the Cleveland Research analyst warned TikTok and Snap Inc are expected to fight much harder for ad budgets in 2026 – and even ChatGPT is starting to steal test budgets that might have otherwise gone to Reddit.
Reddit remains an expensive stock to own
RDDT shares have had an exceptional run since April 2025. When analysts start whispering about “moderating growth”, investors who have made big gains often sell quickly to lock in their profits.
That’s adding to the “sell” pressure on the social media platform as well. But does this “dip” warrant investing in it?
Perhaps not – because Reddit is still trading at about 57x forward earnings.
In other words, even after today’s decline, RDDT is more expensive to own than the “leading” AI names like Nvidia, which is currently going for a forward price-to-earnings (P/E) multiple of roughly 42.
What’s also worth mentioning is that Reddit stock is now trading a little above its 100-day moving average at the $184 level.
A decisive break below this price could accelerate dovish momentum in the near-term.
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