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Investing.com - Needham raised its price target on Reddit (NYSE:RDDT) to $165.00 from $145.00 on Wednesday, while maintaining a Buy rating on the social media platform’s stock. The new target sits well within the analyst range of $75 to $220, with InvestingPro data showing the stock currently trading at $145.80.
The investment firm cited Reddit’s first quarter 2025 results, which exceeded consensus expectations, with channel checks indicating continued strength into the second quarter of 2025. InvestingPro data reveals impressive revenue growth of 64% and an exceptional gross profit margin of 90.8%.
Needham highlighted several positive factors driving the upgrade, including strong daily active user trends, growing ad monetization driven by direct-response advertisements, and a pivot toward full-funnel advertisers.
New products such as Reddit Search and Reddit Answers are expected to improve content discovery and increase user engagement times, while the firm also noted strong free cash flow growth and margin expansion.
The investment firm dismissed concerns that Google (NASDAQ:GOOGL) Search would reduce traffic to Reddit, and pointed to AI-driven tools like Reddit Insights and Conversation Summaries as evidence the platform is already monetizing generative AI capabilities.
In other recent news, Reddit has been in the spotlight with several analyst updates and expectations surrounding its upcoming second-quarter earnings report. Citi has maintained its Buy rating on Reddit, with a price target of $163, expressing optimism that the company’s Q2 2025 results will surpass consensus expectations based on advertiser checks. Bernstein SocGen Group has raised its price target for Reddit to $150 from $130, highlighting a renewed focus on user growth as a positive factor for the stock. Meanwhile, Baird has increased its price target to $151 from $120, noting improved site traffic following earlier Google-related issues.
Citizens JMP and JMP Securities both reiterated their Market Outperform ratings with a price target of $180, despite concerns over slowing user engagement growth. Citizens JMP cited stable user growth due to enhanced visibility through Google search and AI features as potential drivers for the stock. JMP Securities acknowledged a deceleration in Reddit’s U.S. and global in-app time spent growth but maintained its positive outlook. These developments indicate varying perspectives on Reddit’s performance and potential, with analysts closely watching for the company’s earnings release.
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