Reddit price target raised to $65 from $62 at Deutsche Bank
Deutsche Bank raised the firm's price target on Reddit to $65 from $62 and keeps a Buy rating on the shares. Reddit announced a deal to license its data to OpenAI, as well as to incorporate Reddit content into ChatGPT's chatbot and other products, the analyst tells investors in a research note. The firm says that while terms were not disclosed, of note was Reddit's ability to build artificial intelligence-powered features on OpenAI's platform of AI models and OpenAI becoming a Reddit advertising partner. If the cash terms are similar to the Google deal, it could provide $54M of annual EBITDA, assuming 90% incremental margins, says Deutsche Bank. It sees a path to $360M of annual revenue, yielding $324M in annual EBITDA for Reddit. The OpenAI partnership suggests widespread demand for Reddit data, the firm adds.
