In early 2026, Reddit surpassed Facebook and Amazon to become the second most visited website in the U.S., but if you look at its stock this year, you’d think otherwise. $RDDT is down 39% YTD at the time of this writing and ahead of their Q1 earnings. What’s the hold up? It’s not financial performance. Reddit posted 62% annual revenue growth in 2024 and 69% in 2025. They also posted a full profitable year last year, making it their first ever as a public company.
Reddit’s Difference Maker:
Its forums and sub-forums have become a hub for AI Large Language Models (LLMs) to extract information from real life conversations. With over two decades of natural human interactions, Reddit is now selling licensing that data to companies like Google and OpenAI. This only totaled about 6% of their revenue in 2025, but it’s set to grow significantly as more LLM developers seek “clean” human data to avoid the AI slop problem (models training on AI generated content).
Not everyone’s on board. Reddit is in an ongoing fight to control and monetize its user generated data, pushing back against platforms like Perplexity and data scrapers that rely on its content. The risk isn’t losing ownership, but losing control. If AI platforms bypass Reddit and reduce traffic, it could pressure both ad revenue and its ability to charge for data access. This is a key focus beyond earnings.
Key Projects to Watch for Reddit:
Global Growth - One of Reddit’s biggest opportunities is international markets. The company is aggressively using AI to translate its massive English archive into dozens of languages, which rapidly expands its daily active users. Their goal is to hit 120M+, a miss on this number could hinder stock performance.
Reddit Max - Reddit is taking the Meta route by attempting to unlock more advertising revenue through an AI powered ad suite. This is supposed to automate campaigns for small businesses. The advertising space has been gold for Meta and Google, if Reddit can take a slice and monetize their user base, it could mean consistent revenue and profits.
There’s massive upside to this company, but they need to clear that AI licensing hurdle and maintain the same growth trajectory. We'd still pin them in the “growth” category, with double digit percentage runs possible on a positive catalyst. A sell-off on earnings would be attractive to buy into…a gap-up has potential to really take-off if it clears 170.00.
Option Chain Analysis:
RDDT’s option chain expiring on May 15th 2026 currently reflects an implied volatility reading of 99%, which translates to about a $23.75 move from the underlying stock following the report. Whether that’s bullish or bearish depends on the outcome of the earnings call and performance. Options are fairly priced ahead of earnings, not underpriced or overpriced. This could mean markets don’t see a big move coming, but it also means that if a big move does happen, it could meaningfully expand premiums (to either side).
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