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Investing.com - JMP Securities has reiterated its Market Outperform rating and $180.00 price target on Reddit (NYSE:RDDT) despite signs of slowing user engagement growth. The company, currently trading at a P/E ratio of 232, has demonstrated impressive financial performance with revenue reaching $1.45 billion and maintaining a robust 90.82% gross profit margin. According to InvestingPro analysis, the stock appears overvalued at current levels.
The firm reported that Reddit’s U.S. time spent growth decelerated to just 0.3% year-over-year in June, representing a slowdown of approximately 110 basis points. Global in-app time spent growth also decelerated by about 290 basis points to 5.9% year-over-year. Despite these engagement challenges, Reddit’s revenue grew 64.12% over the last twelve months. InvestingPro subscribers can access 18 additional key insights about Reddit’s growth trajectory and financial health.
JMP noted that while comparison periods will ease in July, Reddit still faces difficult two-year comparisons. The platform’s global and U.S. daily active users (DAU) and monthly active users (MAU) growth continues to decelerate, with U.S. monthly active users declining year-over-year for the second consecutive month.
Despite these engagement challenges, the firm highlighted that global and U.S. website visits growth accelerated in June, suggesting some positive momentum in traffic.
JMP analysts suggested that Google’s (NASDAQ:GOOGL) transition to AI search results may be providing a tailwind for Reddit, potentially driving more users to the platform through search.
In other recent news, Reddit has seen a variety of developments that may interest investors. Wells Fargo (NYSE:WFC) raised its price target for Reddit to $118, citing stabilizing advertising trends and increased revenue estimates. The firm projects Reddit’s Q2 2025 revenue to hit $427 million, aligning with the higher end of the company’s guidance. Loop Capital, however, lowered its price target to $200 due to concerns over slowing user growth, although it maintains a positive long-term outlook for the platform. Meanwhile, Baird increased its price target to $151, pointing to improved site traffic and the integration of new shopping-related features.
Additionally, Reddit has launched AI-powered ad tools aimed at enhancing brand engagement by leveraging user conversations. Despite these advancements, Piper Sandler reported a decline in Reddit’s user numbers for the third consecutive month in May, with a 6 million drop in total audience. The report highlighted a broader deceleration trend in both U.S. and international audience growth since March. Reddit is also involved in a legal dispute with Anthropic over alleged unauthorized content scraping, as the company seeks to protect its core value proposition of authentic user interactions.
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