TLDRs:
- Reddit shares dip after CFO sales, testing investor confidence in AI growth.
- Morgan Stanley raises Reddit target to $265 amid AI and ad optimism.
- Evercore sees potential for user revenue growth and licensing expansion.
- Investors await February earnings to gauge Reddit’s advertising and AI performance.
Reddit, Inc. (RDDT) shares experienced a late dip of roughly 2.5% in after-hours trading on Wednesday, closing at $252.38.
The move comes after a Form 4 SEC filing revealed CFO Andrew Vollero sold 3,974 Class A shares on January 9 and 13, ranging from $260 to $263 per share. Vollero executed these trades under a prearranged 10b5-1 plan initiated in September 2025, retaining 251,644 shares following the transactions.
Planned insider sales like these rarely alter the long-term outlook, but they can amplify short-term volatility, especially for a stock like Reddit that is trying to stabilize amid growing interest in AI-driven monetization. Analysts and investors alike are weighing the potential implications of insider activity while keeping an eye on broader revenue trends.
Morgan Stanley Raises Price Target
Amid the recent volatility, Morgan Stanley reaffirmed its confidence in Reddit by raising its price target from $250 to $265 while maintaining an Overweight rating. The investment bank cited the company’s potential to capitalize on AI-related trends and its strong advertising capabilities. According to Morgan Stanley, 2026 could mirror 2025’s growth trajectory for firms generating high returns on invested capital (ROIC) through generative AI applications or GPU-intensive technology.
Investors reacted cautiously to the news, balancing the optimistic price target against the recent insider sales. However, analysts believe the stock’s fundamentals, particularly its AI monetization strategies and ad revenue potential, justify the elevated outlook.
Evercore Sees Revenue Growth Potential
Evercore ISI also weighed in this week, launching coverage on Reddit with an Outperform rating and a $320 price target. The firm highlighted Reddit’s ability to increase average revenue per user through initiatives such as Max campaigns, while emphasizing the emerging revenue opportunities from AI-powered data licensing. Deals with companies like Google and OpenAI position Reddit not only as a social media platform but also as a source of valuable AI training data, a trend that could support long-term profitability.
Mark Mahaney of Evercore described the opportunities as “significant,” pointing to the combination of growing ad sales and licensing revenue as a driver for potential upside. While Reddit operates in a volatile sector, these revenue streams are expected to provide some cushion against fluctuations in ad spending and market sentiment.
Investors Eye February Earnings
All eyes are now on Reddit’s upcoming earnings report, tentatively scheduled for February 11. Market participants are keen to see whether advertising performance and AI licensing translate into consistent revenue streams. Analysts caution that any underperformance could expose the stock’s reliance on optimistic projections rather than tangible growth.
Smaller social media platforms have demonstrated how quickly sentiment can shift when advertising budgets tighten, but Reddit’s scale and automation could help offset these risks. Steady user engagement, expanded ad tools, and transparent moderation policies will be critical to maintaining investor confidence.
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