Key Stats for Reddit Stock
- Price Change for Reddit stock: 6%
- $RDDT Share Price as of Jan. 12: $259
- 52-Week High: $283
- $RDDT Share Price Target: $250
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What Happened?
Reddit (RDDT) stock jumped on Tuesday after Evercore ISI initiated coverage with an “outperform rating” and a $320 price target, implying roughly 25% upside from current levels. Analyst Mark Mahaney called Reddit an “AI sleeper” with massive untapped potential to grow revenue per user.
The upgrade comes as Reddit launches new AI-powered advertising tools and expands its data licensing deals with companies like OpenAI and Google.
Mahaney pointed to Reddit’s recent rollout of R-Max campaigns, which use AI to automate targeting and bidding for advertisers. The feature mirrors tools already offered by Meta, Google, and Amazon.
- Reddit generates most of its revenue from ads shown across its platform, which hosts 2 billion posts and 100,000 communities.
- The company went public in March 2024 and initially soared more than 600% before pulling back from its high of $282.95 late last year.
- Despite the recent rally, Evercore believes Reddit stock still has room to run, citing strong user growth and improving ad performance.
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What the Market Is Telling Us About Reddit Stock
The analyst upgrade suggests Wall Street is waking up to Reddit’s long-term opportunity. Reddit stock has already climbed more than 40% over the past year, but Evercore argues the valuation is justified given the company’s growth trajectory.
Revenue is expected to grow 30% to 40% annually over the next three years, with profits climbing even faster as the business scales.
The key question is whether Reddit can avoid the “growth cliff” that hit social media peers like Snap, Pinterest, and X (formerly Twitter). Those platforms showed early promise before hitting sharp slowdowns.
Mahaney thinks Reddit is different. The platform has “high-intent, search-like inventory” similar to Google and Pinterest, which should support more durable growth than Snap or X.
Reddit is also rolling out new products, such as Shopping Ads, and reporting 75% year-over-year growth in advertiser count.
Another major factor is Reddit’s AI data licensing business. The company has deals with OpenAI and Google to provide training data for large language models.
Evercore believes these arrangements could evolve into “dynamic pricing structures” tied to usage, creating a recurring high-margin revenue stream.
There are risks: AI-enhanced search results from Google could reduce referrals to Reddit by directly answering questions. That concern has occasionally weighed on Reddit stock.
But Mahaney expects Reddit to be a “net beneficiary” of generative AI over time, especially as the company uses AI internally to improve content discovery and ad targeting.
Reddit still earns far less per user than comparable platforms despite high engagement. Closing that gap through better ad formats and targeting should drive significant upside.
Daily and weekly active users are growing at double-digit rates, with international markets expanding even faster than the U.S.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
