Reddit Wins Key Ruling in Anthropic Case, Strengthening AI Licensing Leverage

What happened

A federal judge ruled that Anthropic is contractually bound by Reddit's User Agreement, a significant legal victory in Reddit's broader push to enforce paid access to its data. This ruling supports Reddit's claim that AI companies cannot scrape its content without permission, reinforcing the company's bargaining position in licensing negotiations. While the decision is positive for the AI licensing narrative, Reddit's filings as of Q2 2026 still show 'other revenue' of just $43.3 million (5.4% of total revenue) with management stating there is 'no assurance' non-advertising revenue becomes meaningful. The market has already priced substantial licensing upside into the stock, which trades at 30.7x P/E and 46.9x EV/EBITDA on trailing figures. The next quarterly filings will need to show a material acceleration in other revenue to validate that optimism.

Implication

The judge's decision strengthens Reddit's legal hand, potentially forcing Anthropic and other AI firms into licensing deals. This could accelerate other revenue growth, which is the key swing factor for the stock. However, the current price already reflects optimistic licensing expectations, and the core ad business is still the primary driver. We would look to add on weakness near $125 and trim above $170. Keep monitoring other revenue and management commentary on licensing deals.

Thesis delta

The thesis remains unchanged: Reddit's core advertising business is strong, but AI licensing remains an unproven second leg. This legal win marginally improves the probability of licensing revenue, but we need to see actual P&L impact. The WAIT rating is maintained.