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On Wednesday, Redburn-Atlantic reiterated its Sell rating on Reddit (NYSE: RDDT) with a steadfast price target of $75.00, significantly below the current trading price of $104.62. According to InvestingPro data, the stock is currently trading above its Fair Value, with analyst targets ranging from $75 to $220. The firm’s stance remains unchanged as they express concerns regarding the impact of Google (NASDAQ:GOOGL)’s latest advancements in AI on the social media platform. The analysts at Redburn-Atlantic highlight the acceleration of AI-based search experiences due to Google’s aggressive rollout of AI Mode, which they view as a potential threat to Reddit’s user engagement and revenue growth.
The firm acknowledges that while investor sentiment is starting to reflect concerns over the growth of logged-out users on Reddit, there may be additional, less obvious consequences for logged-in users and the company’s revenue trajectory. Despite these concerns, InvestingPro data shows Reddit maintains impressive gross profit margins of 90.82% and projects 43% revenue growth for the current year. The analysts suggest that the improvements in the tariff situation might not provide enough of a counterbalance to the challenges posed by the evolving search landscape.
Redburn-Atlantic’s commentary points out the competitive pressures faced by Reddit in the rapidly changing tech environment. Their analysis indicates that the increasing shift towards AI-driven search experiences could present significant hurdles for Reddit, particularly if the platform fails to adapt effectively to these industry changes.
The Sell rating and $75 price target are a clear indication of Redburn-Atlantic’s cautious outlook on Reddit’s stock. As the market continues to evolve, the firm underscores the importance of closely monitoring the potential implications for Reddit’s user engagement and revenue, which are critical factors for the company’s long-term success.
Investors will likely watch Reddit’s strategic moves and performance metrics closely in the coming months, as the company navigates the challenges outlined by Redburn-Atlantic and the broader shifts within the tech sector. For deeper insights into Reddit’s financial health and growth prospects, InvestingPro subscribers can access over 20 additional ProTips and a comprehensive Pro Research Report, which provides detailed analysis of the company’s valuation and growth metrics.
In other recent news, Reddit has reported strong financial performance, with its latest earnings report showing a revenue increase that exceeded expectations by $22 million. The company experienced a 61% year-over-year growth in advertising revenue and projects a 49% year-over-year revenue growth for the second quarter of 2025. Seaport Global Securities upgraded Reddit’s stock rating to Buy, setting a price target of $165, citing robust first-quarter revenue growth and strong EBITDA performance. In contrast, Wells Fargo (NYSE:WFC) downgraded Reddit’s stock from Overweight to Equal Weight, reducing the price target to $115, due to concerns about user growth and the impact of AI-powered search tools. Baird also lowered its price target to $120, maintaining a Neutral rating, due to anticipated challenges in U.S. user growth. Citizens JMP raised the price target to $180, maintaining a Market Outperform rating, reflecting confidence in Reddit’s advertising platform improvements and international expansion plans. BofA Securities kept a Neutral rating with a $130 price target, highlighting Reddit’s introduction of Dynamic Product Ads (DPA) to enhance eCommerce advertising. These developments underscore Reddit’s mixed outlook amid strong financial results and challenges in user growth.
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