Reddit: Strong Advertising Momentum Offset by Uncertain AI Monetization Justifies Hold Rating

Bernstein analyst Mark Shmulik has maintained their neutral stance on RDDT stock, giving a Hold rating today.

Mark Shmulik has given his Hold rating due to a combination of factors tied to both Reddit’s strong fundamentals and its strategic uncertainties. He acknowledges that Reddit is delivering very robust revenue growth, with advertising expanding rapidly across formats, industries, and regions, while profitability is running ahead of expectations as management keeps a tight focus on converting revenue into earnings. User metrics are also trending positively, with daily active users rising and the company shifting toward engagement indicators that better reflect long-term business health, including notable growth in search-driven usage. These achievements support the view that Reddit is evolving into a solid, scaled advertising platform despite operating against much larger competitors.

At the same time, Shmulik sees material open questions around Reddit’s role and ultimate payoff in the AI ecosystem. While management continues to emphasize the strategic importance of Reddit’s data for AI models and is reframing data licensing as broader partnerships, the specifics of monetization, execution, and durability of these relationships remain insufficiently defined. The lack of concrete progress updates on these AI initiatives, especially relative to the excitement they generated previously, tempers the otherwise strong advertising and financial momentum. Balancing the company’s impressive near-term performance with the still-uncertain AI upside and competitive dynamics, he concludes that a Hold (Market-Perform) rating with a modestly reduced price target is appropriate at this stage.

In another report released today, Cantor Fitzgerald also maintained a Hold rating on the stock with a $170.00 price target.

Based on the recent corporate insider activity of 164 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RDDT in relation to earlier this year.