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Reddit Stock Has Been Stuck Since August. This Firm Just Made It a Top Pick for 2026.

Dec 23, 2025 10:09:00 -0500 by Nate Wolf | #Technology #Street Notes

Reddit has an edge over its peers in social-media advertising, Needham & Company argues. (Dreamstime)

Key Points

Reddit stock has stagnated to close out 2025, but that won’t last for long, say analysts at Needham & Company.

The firm named Reddit its top stock pick for 2026 in a research note Tuesday, reiterating a Buy rating and a $300 price target. The social media platform has sky-high revenue growth, and its endless trove of forums is a gold mine for artificial-intelligence developers, Needham argued.

Reddit stock was up 43% this year to $233.15 as of Monday’s close. Shares haven’t received much love since hitting a record closing high of $270.71 on Sept. 18, though. Not even a blockbuster third-quarter earnings report at the end of October resulted in sustained momentum.

Its advertising advantages could change that. Reddit has shown an ability to grow its advertising revenue at a rapid pace compared to peers like TikTok, X, and Meta Platforms’ Facebook because of its attractiveness to ad buyers. The platform has a relatively young and growing audience, a collection of new ad tools, and engaged users, Needham said.

“Our channel checks with ad buyers suggest that customers value RDDT’s niche communities, high-intent audiences, growing user base, and longer engagement lengths,” wrote analyst Laura Martin.

Revenue has already surged 64% in 2025—the highest number in Martin’s coverage universe. That kind of jump likely isn’t sustainable, but Needham forecasts 10-year compounded annual revenue growth of 31.6% beginning in fiscal 2027.

The long-term upside for Reddit, meanwhile, comes from its importance to large-language models, or LLMs. AI developers like Alphabet’s Google and ChatGPT maker OpenAI pay to license Reddit’s library of conversational, human-generated content, which spans 16 billion comments and counting.

“RDDT has no high-quality substitutes at similar scale, which should give RDDT pricing power,” wrote Martin. “We believe RDDT’s data will become table stakes for all GenAI LLMs, over time.”

Google and OpenAI already pay Reddit more than $100 million in licensing fees each year. That number could double if Reddit resolves lawsuits against AI startups Anthropic and Perplexity for alleged misuse of content.

(Dow Jones, the publisher of Barron’s, has sued Perplexity AI, a generative AI startup, for copyright infringement.)

Of the 29 analysts polled by FactSet, 18 rate Reddit stock the equivalent of Buy. But the company still has its doubters. More than 14% of Reddit shares are sold short, a significantly higher proportion than that of peers like Snap, at 6.5%, and Pinterest, at 3.3%.

Needham, at least, thinks Reddit can prove those shorts wrong. The firm’s $300 price target implies a 29% gain in 2026, which is one of the highest marks on Wall Street.

Write to Nate Wolf at nate.wolf@barrons.com