TSX gains on big banks strength
Investing.com - Deutsche Bank (ETR:DBKGn) raised its price target on Reddit (NYSE:RDDT) to $205.00 from $180.00 on Monday, maintaining a Buy rating following the company’s second-quarter 2025 performance. The stock has shown remarkable momentum, gaining over 24% in the past week alone, though InvestingPro analysis suggests the stock is trading above its Fair Value.
Reddit reported better-than-expected second-quarter revenue and third-quarter guidance, showing strength across both brand and performance advertising formats. The company achieved impressive revenue growth of nearly 70% year-over-year, maintaining strong gross profit margins of 91%. Global daily active users (DAUs) grew 21% year-over-year to 110.4 million, exceeding analyst estimates, with growth accelerating throughout the quarter.
The company saw U.S. DAUs return to sequential growth, and DAU exit rates for the second quarter exceeded the quarterly average. Reddit also reported additional DAU net additions in July, both domestically and internationally, which helped address concerns about user acquisition.
While Google-related headwinds affected performance, Reddit’s internal initiatives appear to be yielding positive results. These include a new marketing strategy encompassing both brand and performance elements, as well as partnerships with publishers and video-game news sites to stabilize user growth.
Looking forward, Reddit plans to simplify its onboarding process with features like an instant login landing page for referral traffic and the integration of Reddit Answers into Search. InvestingPro subscribers have access to 20+ additional exclusive insights about Reddit’s growth potential and financial health, which currently rates as "GREAT" according to comprehensive analysis. The company’s machine translation capability now covers 23 languages, supporting international growth, with France, Spain, and Brazil contributing over half of the quarter’s international DAU additions.
In other recent news, Reddit reported strong financial results for the second quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share of $0.45, far exceeding the projected $0.19. Revenue reached $500 million, driven by robust advertising growth. Following these results, several firms adjusted their price targets for Reddit. Citizens JMP raised its target to $225, noting that revenue and EBITDA surpassed the high end of guidance by 16% and 28%, respectively. Goldman Sachs increased its target to $212, citing strong revenue growth momentum and improved user growth trends. Morgan Stanley (NYSE:MS) also raised its price target to $230, highlighting better-than-expected user metrics. Additionally, BofA Securities lifted its target to $180 due to strong execution and a 50% increase in advertiser adoption. These developments reflect the positive outlook from analysts regarding Reddit’s performance.
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