Truist is sticking with Reddit (RDDT) stock ahead of an earnings report that will test whether the company’s advertising momentum can outweigh concerns about its dependence on search traffic.
Analyst Youssef Squali reiterated a Buy rating and $275 price target on RDDT this morning, only days ahead of its quarterly update on Thursday.
The bullish call brings a much-needed reprieve to Reddit shares that have fallen out of favor with investors in 2026, currently down some 45% versus their year-to-date high.
What makes Reddit stock attractive?
Squali expects Reddit to post about 50% year-over-year revenue growth and an adjusted EBITDA margin near 45% for its to-be-reported quarter.
For investors, the attraction is the combination. Rapid expansion becomes more valuable when a company can retain a substantial share of incremental revenue as earnings.
That helps explain why Truist remains bullish. RDDT stock offers exposure to advertising growth with an already profitable operation, reducing its dependence on distant promises of eventual scale.
From a technical perspective as well, Reddit’s relative strength index (RSI) sits in the mid-30s as of writing, indicating its share price is approaching oversold levels that often trigger a relief rally.
Better monetization to drive RDDT shares higher
Truist describes Reddit as one of the fastest-growing and most profitable advertising platforms. Its latest reported results help explain that enthusiasm.
Q2 advertising revenue increased 64% to $762 million, while global daily active uniques rose 18% to 130.3 million.
Average revenue per unique increased 36% to $6.18. Together, those figures show the company’s expansion came from both a larger audience and stronger monetization of that audience.
That distinction matters – revenue can keep advancing faster than traffic when advertisers extract more value from reaching users.
However, durability of monetization improvements is one of the concerns Youssef Squali explicitly identifies.
Investors should therefore assess whether solid revenue per user accompanies healthy engagement. Monetization gains offer a strong earnings engine – but assuming they can indefinitely compensate for weaker audience trends would stretch the bullish argument too far.
Reddit must answer key questions on the earnings call
Beyond quarterly ads performance, management faces a strategic question – can Reddit preserve the commercial value of its conversations as artificial intelligence (AI) changes how people find information?
Squali highlights Google algorithm changes, potential AI disintermediation, and data-licensing renewals or new agreements among investors’ principal concerns.
The investment implications run in both directions.
AI services could make Reddit’s content more valuable to license while also allowing users to consume answers without visiting the platform.
Investors should listen for evidence that Reddit can turn that distribution into durable commercial relationships while protecting engagement.
Truist’s Buy rating expresses confidence, but commentary on these issues could matter as much as the earnings figures in determining whether shareholders share that conviction.
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