Analyst Initiates Buy on Reddit with $200 Target and AI Licensing Upside
D.A. Davidson launched coverage of Reddit with a Buy rating and $200 price target after the stock’s 28% year-to-date decline. The analyst cited Reddit’s under-monetization versus peers, its status as the top-cited domain for AI platforms and potential 15–30% rate hikes on key data licensing renewals in 2027.
1. Analyst Coverage Initiation
A D.A. Davidson analyst initiated coverage of Reddit with a Buy rating and set a $200 price target, noting that the stock has declined approximately 28% year-to-date, creating a favorable entry point for investors.
2. Under-Monetization and AI Advantage
The analyst highlighted Reddit’s under-monetization compared to peers, pointing to its text-based community model and status as the most-cited domain across leading AI platforms as potential catalysts for improved monetization.
3. Licensing Deals Renewal
Existing data licensing contracts with Google and OpenAI are due for renewal in early to mid-2027, with rate increases of 15% to 30% forecasted, which could significantly bolster future revenue streams.
4. Litigation and Settlement Outlook
Reddit has initiated legal action against Anthropic over alleged unauthorized content scraping, with a settlement anticipated before Anthropic’s public debut, potentially adding upside to 2026 and 2027 EBITDA estimates.