The Bull Case For Reddit (RDDT) Could Change Following Its Expanding AI Data Role And Insider Sales

• Over the past week, Reddit has attracted fresh attention as analysts praised its growing user base, AI-driven advertising tools, and expanding role as a data source for training AI models, while updated inflation data supported sentiment toward fast-growing tech platforms.
• At the same time, a substantial insider share sale and increasing emphasis on monetizing Reddit’s human-generated data added new angles for investors assessing how the business converts engagement into cash flow.
• We’ll now examine how Reddit’s rising importance as an AI data and advertising partner may influence the existing investment narrative outlined above.

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Reddit Investment Narrative Recap

To own Reddit, you have to believe its combination of high-intent communities, AI-optimized ads, and valuable training data can keep turning engagement into growing, sustainable cash flow. The short term catalyst is whether advertisers and AI partners keep ramping spend; the biggest risk remains a potential pullback if monetization or data usage sparks user or regulatory pushback. This week’s analyst praise and CPI-driven sentiment help near term confidence, but do not materially change those core drivers.

The most relevant update is the RBC Capital Markets price target increase to US$250, which came alongside commentary on Reddit’s AI-driven advertising platform and data licensing deals with Google and OpenAI. That ties directly into the key catalyst of Reddit broadening high margin AI and ad revenues on top of rising daily visitors, while also reminding investors that expectations around this newer data licensing stream are building from a relatively small US$35 million base.

Yet beneath the enthusiasm for AI data deals, investors should still be aware of growing uncertainty around how durable and competitive Reddit’s...

Read the full narrative on Reddit (it's free!)

Reddit’s narrative projects $3.8 billion revenue and $1.0 billion earnings by 2028. This requires 31.8% yearly revenue growth and roughly a $783.7 million earnings increase from $216.3 million today.

Uncover how Reddit's forecasts yield a $239.76 fair value, a 4% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members place Reddit’s fair value between about US$97 and US$338 across 24 independent views, showing a very wide spread in expectations. Against that backdrop, the recent focus on Reddit’s role as a data source for AI training and ad targeting may matter a lot for how different investors think about its long term ability to turn user engagement into durable earnings power, so it is worth exploring several of these viewpoints before forming your own stance.

Explore 24 other fair value estimates on Reddit - why the stock might be worth as much as 46% more than the current price!

Build Your Own Reddit Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Reddit research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Reddit research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Reddit's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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