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Reddit Falls as S&P 500 Exclusion Overshadows Wells Fargo's Cautious AI Forecast
- Reddit shares fell after S&P Dow Jones Indices excluded the company from its quarterly S&P 500 rebalance.
- Shares dropped 5.7% to close at $173.45 on volume of 5.94 million shares, following the exclusion announcement.
- Wells Fargo projects Reddit's data could support AI licensing renewals, but maintains an Equal Weight rating citing headwinds from user growth pressures.
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Conclusion
Wells Fargo forecasts Reddit's data licensing deals with Google and OpenAI could reach $550 million in combined annual revenue upon renewal. However, the firm maintains an Equal Weight rating and flags that licensing pacts have created headwinds to user growth, with an estimated $16 billion 'overhang' on enterprise value. Following the S&P 500 exclusion announcement, RDDT fell from $181.56 on June 4 to $173.45 on June 5, on volume of 5,942,300 shares.