On Tuesday, B.Riley analysts increased their price target on Reddit (NYSE:RDDT) to $187.00, up from the previous $112.00, while maintaining a Buy rating on the company's shares. With analyst targets ranging from $85 to $210, and the stock currently trading at $164.65, the adjustment reflects the firm's confidence in Reddit's potential for growth and margin expansion. According to InvestingPro data, Reddit's current market capitalization stands at $28.91 billion.
The analysts at B.Riley highlighted that Reddit is still in the early stages of growth, with significant potential to surpass expectations within its category. This view is supported by the company's impressive 48.7% revenue growth and remarkable 89.25% gross profit margin. They foresee a substantial rise in advertising revenue, attributing this to a growing user base and enhanced monetization strategies, including improvements to the advertising platform and an increase in ad inventory.
Moreover, B.Riley sees Reddit's data licensing revenue for Large Language Model (LLM) training as a promising avenue for growth. Although they acknowledge the unpredictability of the timing for new partnerships in this area, the potential remains attractive. Discover 12 additional key insights about Reddit with InvestingPro's exclusive analysis and comprehensive research reports.
The firm's analysts believe that Reddit's increasing scale will facilitate strong margin expansion moving forward. With a healthy current ratio of 11.96 indicating strong liquidity, and analysts expecting profitability this year, they have revised their financial forecasts for the year 2025 and beyond upwards. The new price target of $187 reflects these updated expectations, reiterating a Buy rating for Reddit stock.
In other recent news, Reddit has been experiencing significant developments. Financial performance reports show a 68% increase in total revenue and a 56% rise in advertising revenue. BofA Securities has maintained a Neutral rating on Reddit, despite increasing the price target to $180 due to promising revenue prospects. The firm, however, warns of a potential slowdown in the second half of 2025.
Citi, expressing confidence in Reddit's growth, has lifted the company's price target from $120 to $200 while sustaining a Buy rating. The firm cites Reddit's sustained engagement growth and the introduction of new products as key drivers for this optimistic outlook.
Needham, echoing Citi's bullish sentiment, has raised Reddit's price target to $190 while maintaining a Buy rating, based on the company's robust user growth and increasing average revenue per user.
Meanwhile, Baird has kept a Neutral stance on Reddit shares but significantly increased the price target to $160 from the previous $100, reflecting the platform's continuous expansion.
Morgan Stanley (NYSE:MS) has upgraded Reddit's stock from Equalweight to Overweight, setting a new price target of $200. The firm anticipates a 35% growth in U.S. advertising revenue for Reddit between 2024 and 2027.
These recent developments underscore the positive outlook for Reddit's continued growth and financial success. However, the company recently experienced a major outage affecting thousands of users following a software bug fix.
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