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Investing.com - Goldman Sachs raised its price target on Reddit (NYSE:RDDT) to $238.00 from $236.00 while maintaining a Neutral rating on the stock. Reddit currently trades at $194.42, with analyst targets ranging from $110 to $300, according to InvestingPro data.
The investment bank cited Reddit’s ability to convert existing users into logged-in and app-based users through personalization and improved onboarding experiences as positive factors for the company’s outlook.
Goldman Sachs noted that Reddit continues to scale revenues at "well-above industry growth rates and high incremental margins," which should help shift focus away from debates about user growth sustainability, particularly for logged-out and search-based traffic. InvestingPro data shows Reddit’s impressive 70% revenue growth over the last twelve months, with exceptional gross profit margins of 91%.
The firm highlighted Reddit’s positive leverage to long-term secular growth themes in digital advertising, including increasing penetration of digital as a percentage of total media spend and engagement, as well as opportunities in artificial intelligence.
Despite these positive factors, Goldman Sachs maintained its Neutral rating, stating that at current levels, a "significant amount of this growth/operating performance" is already priced into the stock, resulting in what the firm sees as a "balanced risk/reward" for shares. This assessment aligns with InvestingPro’s Fair Value analysis, which suggests Reddit is currently overvalued with a P/E ratio of 169. InvestingPro offers 18 additional tips on Reddit and comprehensive Pro Research Reports for over 1,400 US stocks.
In other recent news, Reddit Inc. reported strong financial results for the second quarter of 2025, highlighting significant year-over-year revenue growth. The company also noted an increase in daily active users during this period. Despite these positive outcomes, there are investor concerns regarding future earnings projections. The earnings call revealed that, although the company is performing well, there is some apprehension about its future financial trajectory. The stock experienced a decline in after-hours trading as a result of these concerns. While the earnings growth is commendable, analysts and investors appear to be cautious about what lies ahead for Reddit Inc. These developments reflect the dynamic nature of the company’s financial landscape.
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