Reddit Shares Under Pressure as Growth Concerns Mount

Reddit Inc. faces mounting skepticism from Wall Street as questions emerge about its ability to sustain its impressive growth trajectory. While the social media platform recently reported strong user and revenue gains, analysts are now casting doubt on its outlook for 2026, pointing to challenges in its advertising business and increased competition in the artificial intelligence sector.

Market researchers at Cleveland Research have issued a cautious note, projecting 2026 revenue of $2.9 billion. This figure represents a 36% year-over-year increase but falls meaningfully below the broader market consensus, which had anticipated growth exceeding 39%. Analyst Ross Walthall of the firm expressed specific concerns about the platform's momentum heading into next year.

The primary issues appear to be twofold. Firstly, Reddit is reportedly encountering difficulties in securing new commercial advertising partnerships. Secondly, existing advertising clients are showing reluctance to commit to larger budget increases for the upcoming period. This combination presents a headwind for the company's core revenue engine.

Should investors sell immediately? Or is it worth buying Reddit?

AI Competition Intensifies

Beyond traditional advertising, Reddit faces a new competitive front. The report highlights that generative AI language models are increasingly prioritizing YouTube as a key data source for training. This shift could marginalize Reddit's vast repository of user-generated content, placing the company at a potential disadvantage in the lucrative AI data licensing landscape and increasing overall market pressure.

Investor sentiment has reacted sharply to this uncertain outlook. The stock price recently touched a new 52-week low of €159.00, reflecting a decline of approximately 20% over the past 30 trading days.

Key Performance Metrics

• Q3 2025 Revenue: $585 million (a 68% increase year-over-year).
• Daily Active Users: 116 million (up 19% compared to the prior year).
• 2026 Revenue Forecast (Cleveland Research): $2.9 billion.

All eyes are now on the company's upcoming earnings report scheduled for release after the U.S. market closes on February 5, 2026. This report will detail Reddit's official fourth-quarter 2025 financial results. Management will host a conference call at 4:30 p.m. Eastern Time to address analyst questions, where the advertising business forecast and the company's strategic positioning in AI are expected to be central topics of discussion.