Reddit stock price target cut to $155 by Citizens JMP

On Friday, Citizens JMP made an adjustment to the stock price target for Reddit (NYSE:RDDT), reducing it from the previous $200.00 to a new target of $155.00. With the stock currently trading at $110.23, InvestingPro analysis suggests Reddit is undervalued relative to its Fair Value. Despite the reduction, the firm maintained its Market Outperform rating for the social media platform’s shares.

The revision in the price target was attributed to lowered estimates by Citizens JMP. Analysts at the firm recalculated the target based on a projected EBITDA of $761 million for the year 2026, which implies a 35% margin. The new price target represents a valuation of approximately 40 times Reddit’s expected 2026 EBITDA. The company currently maintains impressive gross profit margins of 90.49% and has achieved substantial revenue growth of 61.71% over the last twelve months.

Previously, the price target of $200 was anchored on an 18 times multiple of the platform’s projected 2026 revenue. The shift to an EBITDA-based valuation reflects a change in the financial metric used by Citizens JMP to assess the company’s future performance.

The analysts have justified the use of a premium multiple for Reddit’s EBITDA compared to its competitors, citing the company’s faster growth rate as the primary reason. This suggests confidence in Reddit’s ability to expand its business and financials at a quicker pace than similar companies in the sector.

The current Market Outperform rating indicates that Citizens JMP continues to view Reddit’s stock favorably, despite the lowered price target. The rating suggests that the firm expects the stock to perform better than the overall market in the foreseeable future.

In other recent news, Reddit has been the focus of several analyst updates following its earnings release. Piper Sandler raised the company’s price target to $220, maintaining an Overweight rating, citing a recovery in user engagement and an increase in average revenue per user. Needham also reiterated a $220 price target and a Buy rating, highlighting Reddit’s ambitious goals for daily active users and potential revenue growth from various initiatives. Conversely, Guggenheim adjusted Reddit’s price target downward to $170 but maintained a Buy rating, reflecting recalibrated expectations while still optimistic about growth prospects.

Raymond (NSE:RYMD) James reduced its price target for Reddit to $200, keeping a Strong Buy rating, emphasizing Reddit’s substantial user base and the value of its content in the evolving AI landscape. BofA Securities adjusted its price target to $190, maintaining a Neutral rating due to concerns about Reddit’s premium valuation and potential revenue growth slowdown. Despite these concerns, BofA acknowledged Reddit’s strong performance relative to its peers and potential benefits from AI enhancements. Reddit continues to navigate a competitive digital landscape, with analysts expressing varying degrees of optimism about its future growth and profitability.

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