Citizens JMP reiterates Market Outperform rating on Reddit stock

Investing.com - Citizens JMP analyst reiterated a Market Outperform rating and $180.00 price target on Reddit (NYSE:RDDT) on Monday. The social media platform, currently trading at $148.24, has demonstrated impressive revenue growth of 64% and maintains industry-leading gross margins of 91%. According to InvestingPro analysis, the stock appears overvalued at current levels.

The firm believes Reddit’s user growth has stabilized due to consistent visibility gains in Google search and AI-powered search features, including AI Overviews, which could drive upside in estimates and help shares to rerate. With earnings scheduled for July 31, InvestingPro data shows multiple positive indicators, including strong financial health metrics and anticipated sales growth for the current year.

Despite acknowledging the volatility of Google (NASDAQ:GOOGL) search, Citizens JMP notes that Google’s rankings favor content with "experience, expertise, authoritativeness, and trustworthiness" (E-E-A-T), criteria where Reddit ranks highly.

The firm states that Reddit’s visibility across Google has become more stable even as AI results capture a greater share of traffic, allowing Reddit’s story to transition back to advertising gains.

Citizens JMP maintains its positive outlook on Reddit’s monetization momentum, supporting its Market Outperform rating and $180 price target.

In other recent news, Reddit has seen a series of updates and assessments from various analysts. Wells Fargo (NYSE:WFC) raised its price target for Reddit to $118, citing stabilizing advertising trends and increased revenue estimates, projecting a 52% growth in total revenue for Q2 2025. Meanwhile, Baird increased its price target to $151, highlighting improved site traffic and noting the potential for growth with the integration of shopping-related features. JMP Securities maintained its Market Outperform rating with a $180 price target, despite a slowdown in user engagement growth, while Loop Capital reduced its target to $200, expressing concerns over moderating user growth.

Reddit has also launched AI-powered advertising tools aimed at enhancing brand engagement by leveraging user conversations on the platform. The tools, "Reddit Insights" and "Conversation Summary Add-ons," are designed to provide marketers with real-time insights and integrate positive user comments into advertisements. Additionally, Reddit’s ongoing efforts to diversify traffic sources include brand marketing tests and partnerships with external websites.

Despite some challenges, such as moderating user growth, Reddit’s long-term outlook remains positive, with projections of significant revenue and user base expansion by 2029. The company is also addressing legal matters, having recently filed a lawsuit against Anthropic for alleged unauthorized content scraping. These developments reflect Reddit’s strategic focus on growth and innovation amid evolving market dynamics.

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