Can Reddit's Data Licensing Momentum Drive More Upside in the Stock?

Reddit’s RDDT vast repository of authentic conversations is a key catalyst to its monetization strategy, with data licensing emerging as a high-margin growth driver. The 20-year archive has positioned Reddit as the most cited domain for AI training, creating a durable foundation for data licensing, which boosted second-quarter 2025 other revenues by 24% year over year to $34.8 million. The Zacks Consensus Estimate for third-quarter other revenues is pegged at $34.9 million, implying continued traction.

According to Grand View Research, the global AI datasets and licensing market was estimated at $381.8 million in 2024 and is expected to reach $1.59 billion by 2030, reflecting a CAGR of 26.8%. With AI developers seeking large, high-quality conversational datasets, Reddit’s archive of user-generated content is positioned as a differentiated and scalable resource for growth.

Expanding engagement through features like Reddit Answers, which reached 6 million weekly users as of the second quarter of 2025 and machine translation across 23 languages, both of which are broadening participation and enriching the platform’s dataset. Daily Active Uniques (DAUq) grew 21% year over year to 110.4 million, while Weekly Active Uniques (WAUq) advanced 22% to 416.4 million in the recently reported quarter. The Zacks Consensus Estimate for third-quarter DAUq is pegged at 113.8 million, while the consensus mark for WAUq is pegged at 430.9 million, suggesting sustained momentum.

By anchoring its licensing strategy to a growing base of authentic conversations, Reddit is establishing a self-reinforcing model. Stronger engagement expands the archive, which deepens its utility for AI training and opens incremental avenues for revenue appreciation. This flywheel effect, alongside supportive industry trends, signals the potential for durable growth in data licensing over time.

RDDT Faces Competition in Data Licensing

Reddit faces significant competition from larger technology platforms, particularly Meta Platforms META and Alphabet GOOGL. Both Meta Platforms and Alphabet generate massive volumes of user-generated content across Facebook, Instagram and Google’s services, giving them substantial data repositories for AI training. Meta’s vast social graph and Alphabet’s search and YouTube datasets provide scale advantages that rival Reddit’s value proposition. 

However, Reddit’s differentiated archive of authentic, community-driven conversations remains unique in structure and context, offering a specialized dataset not easily replicated. Despite Meta Platforms and Alphabet’s dominance, Reddit’s content depth continues to serve as a distinct advantage in data licensing.

Reddit’s Share Price Performance, Valuation and Estimates

Reddit shares have jumped 33.8% year to date, while the broader Zacks Computer & Technology sector and the Internet Software industry increased 10.8% and 17.6%, respectively.

RDDT's YTD Price Performance

Reddit stock is trading at a premium, with a forward 12-month Price/Sales of 16.51X compared with the industry’s 5.55X. RDDT has a Value Score of F.

RDDT's Valuation

The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at 49 cents per share, up by 17 cents over the past 30 days, implying a significant improvement from the year-ago quarter’s earnings of 16 cents per share.

Reddit Inc. Price and Consensus

Reddit Inc. price-consensus-chart | Reddit Inc. Quote

Reddit currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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