Stock Markets April 21, 2026 08:46 AM

Analyst Sees 2026 Weakness in Reddit Stock as a Buying Opportunity

D.A. Davidson starts coverage with Buy and $200 target, citing under-monetization and value of Reddit’s text-based data for AI models

By Jordan Park RDDT
Analyst Sees 2026 Weakness in Reddit Stock as a Buying Opportunity
RDDT

D.A. Davidson analyst Wyatt Swanson began coverage of Reddit with a Buy rating and a $200 price target, arguing that the company’s share-price decline this year creates an attractive entry point. Swanson highlights Reddit’s relative under-monetization, its value as a text-focused data source for large language models, modest beats in daily active users, pending data licensing renewals with Google and OpenAI, and an ongoing legal dispute with Anthropic as key factors for future revenue upside.

Key Points

  • D.A. Davidson started coverage of Reddit with a Buy rating and a $200 price target, viewing recent share-price weakness as a buying opportunity - impacts equity investors in internet and technology sectors.
  • Analyst highlights Reddit as under-monetized relative to peers and cites its text-based community content as a structural data advantage for large language models - relevant to AI developers and ad-tech monetization strategies.
  • Traffic data from Similarweb suggests Reddit may beat consensus daily active user estimates by about 1.3%, and April year-over-year performance was the strongest in 12 months - important for advertising revenue expectations.

D.A. Davidson analyst Wyatt Swanson initiated coverage of Reddit this week, assigning a Buy rating and setting a $200 price target. Swanson told clients that the company’s pronounced share-price decline year-to-date has opened a potentially compelling buying window for investors.

Reddit’s stock has slid by roughly 28 percent so far this year. The drop reflects investor concerns over slowing user growth, the company’s leverage in negotiations with large artificial intelligence firms, and broader macroeconomic uncertainty, according to the analyst note.

Despite the declines, Swanson argues the company remains materially under-monetized compared with peers. He emphasizes the structural characteristics of Reddit’s platform - which centers on text-based community discussion rather than social graphs or short-form video - as a distinctive advantage when it comes to providing training data for large language models.

The research note cites a study indicating that Reddit is the most-cited domain across major AI platforms, including ChatGPT, Google AI Overviews, and Perplexity. That prevalence, Swanson suggests, supports Reddit’s role as a valuable data source for AI developers.

On the operational front, Swanson pointed to traffic data from Similarweb ahead of the company’s upcoming first-quarter results. Those metrics indicate Reddit could top daily active user consensus estimates by about 1.3 percent - roughly in line with the platform’s average beat since its public offering.

Swanson acknowledged that expectations have moderated following a choppier March, but he noted there is scope for Reddit to exceed forecasts. He called out April’s total-day year-over-year performance as the strongest observed in the prior 12 months, which he views as evidence of positive momentum heading into forthcoming results.

The analyst also outlined the importance of Reddit’s data licensing arrangements with AI companies. Existing contracts with Google and OpenAI are due for renewal in early to mid-2027. In his base-case scenario, Swanson assumes Reddit can renegotiate those agreements at rates 15 to 30 percent higher than current terms.

Separately, Reddit is pursuing legal action against Anthropic, alleging the company scraped Reddit content without authorization. Swanson regards a settlement as the most likely resolution before Anthropic’s anticipated public debut later in 2026. He argues that companies typically become more inclined to resolve ongoing litigation ahead of initial public offerings, and that a settlement could lift 2026 and 2027 revenue and EBITDA versus current estimates.

Overall, Swanson believes most of the material catalysts for Reddit are likely to unfold in the second half of 2026 and into 2027. Given the stock’s weak performance year-to-date, he summarized that the current share-price retreat represents an opportunity to buy.


Contextual note: The points above reflect the assessments and assumptions presented in the D.A. Davidson research note summarized by Swanson, including the stated price target and timing for contract renewals and potential legal resolution.

Risks

  • Slowing user growth remains a concern and could continue to pressure ad monetization and advertiser demand - this affects social media and digital advertising sectors.
  • Negotiating position with large AI firms is uncertain; renewal terms for Google and OpenAI contracts are not guaranteed and could impact future licensing revenue - relevant to data licensing and AI monetization.
  • Ongoing litigation with Anthropic introduces legal and timing uncertainty; while a settlement is deemed likely by the analyst, outcomes and timing could alter revenue and EBITDA projections for 2026 and 2027 - impacting legal risk exposure for tech firms.

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