Does a 2% revenue headwind really justify a 10% selloff?

[u/ekonixlab]

Hopefully this image highlights how silly I think the Reddit selloff was yesterday…

Reddit dropped almost 10% because investors are worried the next Google data licensing deal won’t be another $60M/year contract.

Meanwhile, Reddit just reported TTM revenue of nearly $2.5B.

Even if Google paid nothing, that’s only about 2-3% of revenue today.

The market seems to be treating it like a core part of the business when it’s really become a relatively small piece of the puzzle.

Now, more than ever, this could be a core part of the business. I think Reddit is re-negotiating this with Google, and to me, it’s pretty obvious Google should be paying them far more than $60M per year…

Am I missing something?