Bernstein raises Reddit stock rating to Market Perform

On Friday, Bernstein SocGen Group revised its stance on Reddit (NYSE: RDDT), elevating the company’s stock rating from Underperform to Market Perform and increasing the price target to $130.00 from the previous $110.00. The adjustment comes amidst recognition of Reddit’s solid management performance and its ability to navigate through a volatile market environment. According to InvestingPro data, Reddit currently trades at $118.79, with analyst targets ranging from $75 to $222, suggesting mixed opinions about the stock’s valuation. InvestingPro analysis indicates the stock is slightly overvalued at current levels.

The upgrade reflects a change in sentiment by Bernstein analysts based on Reddit’s recent business activities. Despite lingering questions about the company’s reliance on Google (NASDAQ:GOOGL) and the limitations of social media monetization for small and medium-sized enterprises, the analysts have acknowledged Reddit’s adept handling of these challenges. The company has demonstrated impressive financial metrics, with a robust gross profit margin of 90.49% and substantial revenue growth of 61.71% over the last twelve months.

Reddit’s management team has been commended for their strong execution, particularly in an uncertain market where the company’s size has allowed it to remain relatively insulated from broader macroeconomic fluctuations. Moreover, Reddit has been actively expanding its advertiser base, a move that has contributed positively to the company’s outlook. InvestingPro analysis reveals the company maintains strong financial health with an excellent current ratio of 12.63, indicating robust liquidity. Get access to 12 additional InvestingPro Tips and comprehensive analysis through the Pro Research Report.

While user growth remains a topic of debate, recent trends suggest that Reddit has the potential to maintain a trajectory of sustained positive growth. The company’s strategic moves and management’s execution have provided enough evidence for Bernstein analysts to revise their expectations for Reddit’s future performance.

The new price target of $130.00 represents a notable increase and implies a level of confidence in the company’s ability to reach and potentially exceed this valuation. Reddit’s ability to stay focused on its business objectives in a turbulent market has played a key role in this revised assessment.

In other recent news, Reddit Inc (NYSE:RDDT). reported a strong financial performance for Q1 2025, with revenue reaching $392 million, marking a 61% increase year-over-year. The company also exceeded earnings expectations, reporting an earnings per share (EPS) of $0.13 against the forecasted $0.01. Advertising revenue contributed significantly to this growth, totaling $359 million, also up 61% from the previous year. Reddit’s international markets showed promising expansion, with international ad revenue growing 83% year-over-year. Analyst firms like JMP Securities noted the company’s robust growth, with Reddit’s stock experiencing positive sentiment following the earnings announcement. The company continues to focus on product improvements and international expansion to sustain its growth trajectory. Reddit’s strategy includes enhancing its advertising solutions and leveraging community-driven content to attract more advertisers. Looking ahead, Reddit projects Q2 2025 revenue to be between $410 million and $430 million, representing a 46-53% year-over-year growth.

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