Reddit Inc. (RDDT) is experiencing growth in its AI initiatives, highlighting over 25 billion posts and comments from nearly 500 million weekly users. The company aims to enhance user engagement and content quality through partnerships with AI leaders like Google and OpenAI, generating licensing revenues and positioning Reddit as a critical data source for AI model training. Management anticipates revenues between $715 million and $725 million for Q2 2026.
In the first quarter of 2026, Reddit reported a 30% year-over-year increase in weekly active users for its search feature, along with notable improvements in ad performance—17% reduction in cost per action and a 25% increase in conversions for AI-enabled campaigns. However, despite these advancements, RDDT shares have dropped 19.4% year-to-date, underperforming the broader technology sector.
Reddit’s current valuation shows a forward Price/Sales ratio of 9.32X, compared to the tech sector average of 6.88X, and it is expected to report earnings of $4.83 per share for 2026, suggesting an 84.35% year-over-year growth.
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