Reddit Stock Is Ready to Run Again

A trader works during the Reddit IPO at the New York Stock Exchange in March 2024. (Michael Nagle/Bloomberg)

For thousands of New Jersey residents, Reddit proves its worth every day by giving commuters a place to doomscroll about NJ Transit. The stock should continue proving its worth in 2026, too.

Shares of Reddit have soared more than 400% since their debut last spring. With a more than 40% gain in 2025, they’re easily outpacing the S&P 500 and Nasdaq Composite , helped by strong earnings, increasing numbers of daily active users, and advertising and licensing deals.

Yet Needham analyst Laura Martin thinks the shares will climb nearly 30% more. She reiterated a Buy rating on the shares on Tuesday, naming it her top pick for next year, with a $300 price target. On Monday, Citigroup named Reddit among its top picks for 2026 as well, and it got a similar shout out from Truist Securities last week.

Why the sudden bullishness? For one, Reddit is human-powered. The fact that people create its content fosters trust, generates authenticity, and makes it a more valuable source for large language models. And that content can be licensed to train large-language models. “Already, Reddit is generating more than $100 million per year in fees from OpenAI and Gemini/Google, which could double with Anthropic and Perplexity fees post-litigation,” she writes.

Reddit’s growth, however, will depend on attracting even more humans to the site by making it easier for new users to get acquainted with the platform. If Reddit succeeds, it will improve the odds that those new users become regulars, maximizing revenue potential. In the most recent quarter, daily active users increased in the low-single-digit range quarter over quarter to 116 million.

Users tend to spend more time per visit on Reddit than those on X, formerly known as Twitter, or Snapchat, but Reddit tends to monetize their users less, meaning there’s more potential upside if it can play catch-up. “We expect Reddit to remain one of the fastest-growing companies under coverage in 2026, driven by AI improvements to its core monetization tools,” writes Truist’s Youssef Squali.

Needham’s Martin is also upbeat about features like Reddit Answers—an artificial-intelligence-powered feature that allows users to get answers to specific questions that should further improve engagement. Reddit is similarly attractive to advertisers. She highlights that the company offers so-called full-funnel ads, which follow the buyer from beginning to end, or from the discovery of the product to the final purchase, with points in between. “Reddit offers ad buyers high-intent audiences in a low ad-clutter environment,” she writes.

Finally, it’s hard to argue with Reddit’s growth. Its top line will probably soar around 64% this year, and is likely to jump almost 40% in 2026, making it the fastest-growing company in Martin’s coverage, “growing even faster than the entire mobile app category,” as well as TikTok, Meta Platforms’ Instagram, and Snap .

That helps explain the company’s valuation of some 60 times 2026 expected earnings, which admittedly is high even for the tech space. Martin’s target is higher than most analysts, according to data from FactSet—the average target price of $250 implies roughly 9% upside from current levels—and her forecasted 2026 earnings per share of $5.64 is also one of the more bullish estimates. Yet even the consensus of $3.87 would mean its EPS would jump by two-thirds next year.

As they say on Reddit, just buy the stock.

Write to Teresa Rivas at teresa.rivas@barrons.com