S&P 500 falls as traders turn sour on tech
Investing.com - RBC Capital has reiterated its Sector Perform rating and $245.00 price target on Reddit (NYSE:RDDT) following the company’s latest earnings report, which showed significant revenue and guidance upside. According to InvestingPro data, Reddit’s current stock price of $194.42 sits below analyst high targets of $300, though InvestingPro’s Fair Value model suggests the stock is currently overvalued.
The firm noted that Reddit delivered "another strong print" with impressive revenue performance, though this was partially offset by a deceleration in U.S. daily active users (DAUs). On a positive note, September DAUs accelerated, though intra-quarter details weren’t provided. Reddit’s revenue growth has been remarkable, with InvestingPro data showing a 69.97% increase in the last twelve months, supporting the company’s exceptional 91.04% gross profit margin.
RBC Capital highlighted several encouraging factors, including Reddit’s still-evolving ad platform, increasing ad load, growing advertiser base, and user trends—all suggesting "significant further revenue growth & upside potential" for the social media company.
The firm also mentioned that Reddit’s Google renewal isn’t due until next year, but discussions remain positive with a focus on driving engagement rather than traditional "data for dollars" agreements. Additionally, engagement on new features like Search & Answers continues to trend positively.
RBC Capital did flag concerns about U.S. user growth, noting that both logged-in and logged-out U.S. DAUs decelerated to single digits, which could strengthen bearish arguments around the Google/GenAI case, especially following Google’s strong AI adoption commentary.
In other recent news, Reddit Inc. reported strong financial results for the second quarter of 2025, highlighting significant year-over-year revenue growth and an increase in daily active users. Despite these positive earnings, there were investor concerns regarding future earnings projections. Additionally, Goldman Sachs adjusted its price target for Reddit, raising it from $236.00 to $238.00 while maintaining a Neutral rating on the stock. The investment bank pointed to Reddit’s success in converting existing users into logged-in and app-based users through personalization and enhanced onboarding experiences as positive factors influencing the company’s outlook. These developments underscore the dynamic nature of Reddit’s current market situation.
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