Reddit Jumps 7% After Baird Says the Market Already Priced In the Worst Licensing Outcome — Pinterest Sits Still

Reddit, Inc. (NYSE: RDDT) climbed roughly 7% Wednesday morning after Baird told clients that investors have already discounted the worst-case outcome for the company’s two AI data licensing agreements, both of which expire next year. The note reframes the single question that has dominated the stock all year, and traders responded immediately: shares moved to $155.07 while the broader tape barely budged.

Key Points

• RDDT rallied about 7% to $155.07 after Baird argued the market has already priced in the low-end scenario for Reddit’s AI licensing renewals.
• Baird’s Colin Sebastian reiterated a Neutral rating and a $185 price target, with base and bull cases implying roughly $10 and $20 per share of additional upside.
• Two agreements drive nearly all licensing revenue — Alphabet’s (NASDAQ: GOOGL) Google deal, reported at $60 million a year, and the OpenAI deal, reported at $70 million. Both expire in 2027.
• CEO Steve Huffman wants higher fees and usage-based pricing on any renewal, pointing to 130 million daily active uniques and more than 26 billion posts and comments as of June.
• Pinterest, Inc. (NYSE: PINS) held flat at $21.26, confirming that the move belonged to Reddit alone rather than the social media group.
• RDDT entered the session down 37% year to date, so the rally started from a deeply repriced base.

A Single-Name Repricing, Not a Sector Move

While Reddit surged, Pinterest (NYSE: PINS) traded essentially unchanged at $21.26, and the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) added just 0.5% to $765.19. In other words, no sector-wide catalyst lifted social media names on Wednesday. Investors repriced one company on one research note.

That context matters. Reddit stock had already fallen 37% year to date through Tuesday’s close, which means Wednesday’s bounce came off a base that had absorbed months of selling. Consequently, a 7% pop restores far less than it might appear at first glance.

Baird Reframes the Renewal Overhang

Baird analyst Colin Sebastian reiterated a Neutral rating and a $185 price target on Reddit (NYSE: RDDT). Sebastian argued that the current share price already reflects an outcome close to the firm’s low-end scenario for the licensing renewals. Meanwhile, his base and bull cases point to roughly $10 and $20 per share of upside, respectively.

That framing changes the conversation. Rather than asking how much further the renewals can drag the stock down, Baird asks how much asymmetry the setup now offers — because the downside case already sits in the price.

Still, the concentration risk remains real. Reddit’s licensing agreements with two large AI partners both expire next year, and the company has stated that substantially all of its licensing revenue flows from those two contracts. That dependency anchors the entire debate.

What Actually Gets Renegotiated

The first agreement runs through Alphabet’s (NASDAQ: GOOGL) Google. It dates to a February 2024 expansion that granted Google access to Reddit’s Data API, and reports place the value at roughly $60 million per year. The second agreement, signed with privately held OpenAI in May 2024, is reported at approximately $70 million.

CEO Steve Huffman has signaled that Reddit intends to push for higher fees on both renewals and to move away from flat pricing toward usage-based terms. He grounds that position in scale: as of June, the platform counted 130 million daily active uniques and more than 26 billion posts and comments, and that archive expands every day. Therefore, Huffman contends, Reddit’s data retains its value even after years of partner access — a direct argument for repricing higher.

Bears counter with an equally clear thesis. The agreements could renew at lower rates, cover fewer services, or lapse entirely. Furthermore, Reddit’s most recent earnings call flagged choppy search referral traffic and limited visibility into AI overviews — pressures that trace back to the same Google relationship anchoring the licensing revenue.

What to Watch Next

Investors should watch upcoming earnings updates for any confirmation of renewal terms or timing. Even a partial renewal on usage-based pricing would recalibrate the debate quickly for Reddit (NYSE: RDDT).

Traders, meanwhile, may want to confirm follow-through above prior resistance before treating Wednesday’s move as a durable trend change. Position sizing deserves particular attention here, because the licensing renewals function as effectively binary events for a meaningful slice of revenue, and non-advertising income remains concentrated in just two customers. Accordingly, sizing exposure to survive a range of renewal outcomes makes more sense than betting on a single one.