Reddit Stock (RDDT) Falls despite Jefferies' Backing for 2026 amid AI Threats

Shares in Reddit (RDDT), the California-based social news aggregator, fell about 2% on Thursday despite Jefferies' latest bullish view on the stock heading into 2026.TipRanks Cyber Monday Sale Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence. Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off Jefferies analyst John Colantouni, in his "2026 Internet Playbook" note, reaffirmed his Buy rating on RDDT and elevated his price target by about 8% to $325 per share. This is even though Calantouni warned investors to be picky of internet stocks to add to their portfolio in 2026. Analyst Flags Margin and AI Risks for 2026 According to the Jefferies analyst, such a cautious approach is key as he expects expanding investments by social media companies to continue to pressure the ability to grow profit margins. Colantouni also warned that AI disintermediation — AI tools sitting between users and traditional internet platforms — could curtail the level of multiple stock price appreciation in the incoming year. Some investors have raised concerns about AI tools such as chatbots, search functions, and content aggregators, weakening traditional social media platforms by reducing traffic and ad impressions. Reddit Remains 'Important' despite AI Threat Colantouni's warning comes as data continues to show that Alphabet's (GOOGL) Gemini AI chatbot continued to attract massive mobile downloads following the mid-November release of Gemini 3.0, which has been described as Google's most powerful AI model yet. According to official figures from Google, Gemini had 650 million monthly active users in October — up from 450 million in July. However, startup OpenAI (PC:OPAIQ) — which has issued a "code red" alert to defend its market share — continues to lead the race with 900 million weekly active users. Meanwhile, Citizens analyst Andrew Boone previously contended that Reddit remains "increasingly important" to the open web ecosystem as search engines and chatbots rely on its content. Boone believes that Reddit's Answers feature would be a significant catalyst for the company in 2026. Answers is Reddit's new default search function that uses AI to collate and summarize responses to users' queries. Is Reddit a Strong Buy? On Wall Street, Reddit's shares remain a Moderate Buy based on analyst consensus. This breaks down to 13 Buys and eight Holds issued over the three months. At $255.25, the average RDDT price target implies more than 9% growth potential.