These are top 10 stocks traded on the Robinhood UK platform in July
On Friday, Goldman Sachs analyst Eric Sheridan updated his outlook on Reddit (NYSE: RDDT), increasing the price target to $140 from the previous $124, while maintaining a Neutral rating on the shares. According to InvestingPro data, Reddit has demonstrated impressive revenue growth of 61.7% in the last twelve months, with a market capitalization of $21.5 billion. Sheridan’s assessment followed Reddit’s first-quarter earnings report for 2025, which he noted highlighted several key points including robust revenue growth, healthy user growth trends, and strong operating leverage.
Reddit’s Q1 financial performance demonstrated solid revenue growth and promising guidance for the second quarter, maintaining its exceptional gross profit margin of 90.5%. The company also reported a strong uptick in user numbers throughout the first quarter. However, Sheridan pointed out a notable slowdown in user growth in April QTD, based on management’s disclosures. InvestingPro subscribers can access 12+ additional exclusive tips about Reddit’s financial health and growth prospects.
The analyst underscored Reddit’s ongoing positive developments in strategic areas such as artificial intelligence (AI), improved performance of lower-funnel advertisements, and diversification of revenue growth sources. Furthermore, Sheridan commended Reddit’s cost discipline and return on investments, which have contributed to the company’s strong operating leverage.
Despite the current positive trajectory, Sheridan anticipates that discussions among investors will continue to revolve around the sustainability of Reddit’s user growth. He believes that sustained efforts in user conversion and maintaining healthy revenue growth could eventually shift the focus away from these concerns.
Looking to the future, Sheridan reiterated his confidence in Reddit’s alignment with long-term secular growth trends within the sector, including digital advertising, AI, and the creator economy. He expressed increasing conviction in Reddit’s ability to sustain revenue growth rates above the industry average, bolstered by management’s execution.
Yet, at the current stock levels, Sheridan sees a balanced risk/reward scenario. He calls for greater clarity on the short-term operational climate, considering factors such as advertising market dynamics and the comparison of user growth year over year. The raised price target to $140 reflects these considerations alongside the maintenance of a Neutral rating on Reddit stock.
In other recent news, Reddit reported its Q1 2025 earnings, significantly surpassing analyst expectations. The company achieved an earnings per share of $0.13, well above the projected $0.01, and revenue soared to $392 million, marking a 61% year-over-year increase. This impressive growth was driven by a substantial rise in advertising revenue, which also increased by 61% compared to the previous year. Citi analysts responded to these strong results by raising Reddit’s stock price target from $150 to $158 and maintaining a Buy rating, citing the platform’s acceleration in ad revenue growth and increased daily active users. Meanwhile, Bernstein SocGen Group upgraded Reddit’s stock rating from Underperform to Market Perform, increasing the price target from $110 to $130, acknowledging Reddit’s adept management and strategic handling of market challenges. Reddit’s management has been praised for expanding its advertiser base, contributing positively to the company’s outlook. Despite concerns about potential impacts from changes in Google (NASDAQ:GOOGL)’s algorithm, analysts remain optimistic about Reddit’s revenue growth and the anticipated rollout of new features like Reddit Answers and Direct Purchase Ads.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.