Reddit stock holds $190 target on strong purchase influence

On Wednesday, JMP Securities maintained a bullish stance on Reddit (NYSE: RDDT), reiterating a Market Outperform rating and a $190.00 price target. Currently trading at $194.75 with a market capitalization of $34.19 billion, Reddit’s stock is near its 52-week high of $196.83. According to InvestingPro analysis, the company, known for its vibrant community and discussion forums, has recently showcased compelling statistics highlighting its influence on consumer behavior. According to JMP Securities, Reddit is a key player in online shopping discussions, with over half of all online mentions of purchase talks occurring on the platform.

The analytics further revealed that approximately one-third of shoppers who learn about a product via independent review sites, Amazon (NASDAQ:AMZN), or Google (NASDAQ:GOOGL) tend to visit Reddit for additional insights before making a purchase. This trend underscores Reddit’s role as a go-to resource for consumers looking to make informed decisions. The platform’s business model appears robust, with InvestingPro data showing impressive gross profit margins of 89.25% and strong revenue growth of 48.7% in the last twelve months.

Reddit’s credibility among users is also noteworthy, as it is considered the most trusted platform for discovering new products and brands. This trust is a significant asset for Reddit as it continues to shape consumer purchasing patterns.

The analyst pointed out that Reddit’s potential in the search domain is substantial, especially with the ongoing improvements to its Answers feature, which enhances search capabilities. With over a billion searches conducted on Reddit each month, the platform’s search function presents a considerable opportunity. The anticipation of paid search features, expected to roll out in the second half of 2025 or the first half of 2026, was also highlighted as a positive development for the platform’s revenue prospects.

JMP Securities’ continued support for Reddit reflects confidence in the company’s ability to leverage its unique position in influencing consumer behavior and expanding its search capabilities, which could further drive growth and profitability. While analyst targets range from $85 to $215, InvestingPro analysis suggests the stock is currently trading above its Fair Value. Subscribers can access 15+ additional ProTips and comprehensive financial metrics to make more informed investment decisions.

In other recent news, Reddit has been making significant strides in its financial performance and strategic growth. The social media platform has seen a 68% increase in total revenue and a 56% rise in advertising revenue, while also introducing a new ad import feature that streamlines ad campaign imports from Meta Platforms Inc (NASDAQ:META). This feature was highlighted by Piper Sandler analyst Thomas Champion, who sees it as a potential catalyst for attracting more advertisers to Reddit’s platform.

In addition, JMP Securities has increased its price target for Reddit shares to $190, maintaining a Market Outperform rating. The firm anticipates that Reddit will surpass both JMP Securities’ and the buyside’s financial expectations due to ongoing engagement momentum and the maturation of Reddit’s advertising products.

To further attract advertisers, Reddit is offering a 10% return in ad credits for brands that spend between $150,000 and $1 million, and a 15% return for advertisers who spend more than $1 million. These recent developments highlight Reddit’s efforts to enhance its competitiveness in the digital advertising space and position itself as a more accessible platform for advertising campaigns.

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