Story
Reddit Stock Rallies Over 5% Ahead of Earnings, Rebounding From Data Deal Concerns
Summary
Shares of Reddit (RDDT) jumped more than 5% on Monday, recovering from a recent sell-off as investors repositioned ahead of the company's quarterly earnings report and looked past concerns about a major AI data licensing agreement.
Reddit (RDDT) shares rallied more than 5% in morning trading on Monday, staging a sharp recovery from a recent sell-off driven by concerns over a key AI data licensing partnership. The move comes as investors reposition ahead of the company's upcoming earnings report and as a supportive broader market provides a tailwind.
Rebound from Oversold Levels
The stock's rebound follows a roughly 9% decline in the preceding days, a drop that pushed its Relative Strength Index (RSI) toward technically oversold territory. That sell-off was triggered by a Wall Street Journal report that Reddit was considering not renewing its content licensing agreement with Google, a deal reportedly worth approximately $60 million per year.
Investors are now looking ahead to Reddit's second-quarter 2026 financial results, scheduled for release after the market closes on July 30. The pre-earnings rally suggests some traders are betting on a positive report.
Analyst Expectations and AI Strategy
AdWall Street analysts have maintained a constructive outlook heading into the earnings release. Firms including Wedbush, Jefferies, and Piper Sandler reiterated positive ratings on the stock in July, with a consensus average price target around $221 per share. Analysts broadly expect the company to report revenue in the range of $731 million to $733 million, which would represent year-over-year growth of about 47%.
While the uncertainty around the Google deal rattled investors who view AI data licensing as a key growth engine, Reddit has a separate partnership with OpenAI. CEO Steve Huffman has also publicly stated an ambition to shift both agreements toward higher, usage-based pricing models when they come up for renewal in 2027.
Broader Market Support
The rally was also supported by a positive session for the wider market, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all trading higher. Despite a busy week of economic data ahead, including a Federal Reserve interest rate decision and Q2 GDP figures, investor risk appetite remained firm in early trading.
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