B. Riley analyst Naved Khan views the Scale AI, Meta Platforms (META) transaction as positive for Reddit (RDDT). The implied $29B valuation for Scale AI points to the intrinsic value of Reddit’s “large and growing corpus,” the analyst tells investors in a research note. Riley also believes the independence of Reddit’s dataset makes it “all the more valuable” for licensing, given reports of large language model providers’ plan to leave Scale AI post the deal. Further, Reddit’s core advertising business remains on track to “far outpace industry growth” with expanding margins, and the announcement of adding community intelligence capabilities is an incremental positive for growth in ad dollars, contends Riley. The firm keeps a Buy rating on Reddit with a $220 price target.
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