KeyBanc Capital Markets initiated coverage on Reddit with an Overweight rating. The firm set a $225 price target ahead of the company's second-quarter earnings report on Thursday.
Analyst Justin Patterson identifies Reddit’s user-generated content as a high-value asset for training AI models. The firm views Reddit as a unique, asset-light vehicle for AI growth. This data provides monetization opportunities through both advertising and licensing deals.
KeyBanc forecasts annual revenue growth exceeding 30% as Reddit invests in its communities and ad platforms. The bank also projects long-term EBITDA margins of 50% based on low capital expenditure requirements. Wall Street expects significant year-over-year growth in revenue and earnings for the upcoming report.