Reddit Inc (NYSE: RDDT) is an active participant at Cannes Lions, the world's largest festival for marketing industries, organized in France from June 22 to June 26 this year. Meetings with the company's CEO and COO at Cannes revolved around AI and agentic AI, according to Needham.
- The Reddit Analyst: Analyst Laura Martin maintained a Buy rating and price target of $300.
- The Reddit Thesis: Cannes Lions is the advertising industry's "biggest global gathering of the year," where the ad agencies of leading brands share ideas, sell new products, make deals and discuss their innovation roadmaps, Martin said in the note.
She noted that "speed" referred to different things, including:
- Cutting out management layers
- Breaking down operational boundaries to foster collaboration
- Swapping humans for AI and GenAI
- Manager compensation no longer linked to how many people they manage
- Compensation being linked to speed of achieving outcomes
The analyst said that the key takeaways from meeting Reddit's CEO and COO were:
- New GenAI deals with Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) and OpenAI should come at higher fees upon renewal, as "human authentication is a mission-critical layer for LLMs"
- New Search product creates value by signaling higher intent, faster onboarding of new users, and higher additional revenues by keeping people engaged for longer
- The company is steady
- The internal adoption of "The human company" branding, with GenAI and Agents being used in limited ways
- Reddit is "largely immune from the Agentic maelstrom"
- Upgrading senior executives, but not reconsidering its organizational design