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Investing.com - BofA Securities has raised its price target on Reddit (NYSE:RDDT) to $180.00 from $150.00 while maintaining a Neutral rating on the stock. The social media platform, which generated $1.45 billion in revenue over the last twelve months with impressive 64% year-over-year growth, continues to show strong financial performance.
The firm cited "strong execution & outlook" as key factors behind the price target increase, highlighting the launch of Shopping DPAs and rapidly growing advertiser adoption, which increased by 50%.
BofA Securities noted that while Reddit remains exposed to some user volatility from Google (NASDAQ:GOOGL) traffic, lower ad loads and strong return on ad spend should limit revenue impact.
The firm maintained its Neutral rating based on three key concerns: premium valuation at 13x 2026 price-to-sales ratio after hours versus competitors at 5x, limited scale of logged-in daily active users (23 million in US) with decelerating growth, and likely traffic volatility around Google AI changes.
BofA Securities believes the second and third quarter ad spend will prove "unusually strong," partly driven by traffic relief following a March downturn.
In other recent news, Reddit reported impressive financial results for the second quarter of 2025, with earnings per share (EPS) reaching $0.45, far exceeding the forecasted $0.19. The company achieved a revenue of $500 million, bolstered by robust advertising growth. Reddit’s revenue and EBITDA surpassed the high end of guidance by $70 million and $37 million, respectively. Advertising revenue growth accelerated to 84% year-over-year during the quarter. Following these results, Citizens JMP raised its price target for Reddit to $225, maintaining a Market Outperform rating. Similarly, Goldman Sachs increased its price target to $212, while keeping a Neutral rating, noting the strong revenue growth momentum and improved user growth trends. These developments reflect Reddit’s ability to exceed market expectations and drive significant growth.
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