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Investing.com - Citizens Financial maintained its Market Outperform rating and $300 price target on Reddit (NYSE:RDDT), currently trading at $211.70, following new data about the platform’s advertising effectiveness. According to InvestingPro data, the company has demonstrated impressive revenue growth of ~70% in the last twelve months.
The investment firm cited findings from Kantar, based on Reddit-provided campaign data, showing that Reddit performs particularly well for products with long-consideration purchase paths.
According to the research, approximately 40% of Reddit’s content contains a commercial component, while about 60% of queries on the platform have commercial intent, positioning Reddit as influential in purchase decisions.
Citizens noted that Reddit’s core use case includes consumers researching products and services, creating an environment where the platform can effectively influence purchasing behavior.
Kantar’s analysis concluded that advertisers it studied have "materially underinvested" in Reddit, which Citizens views as an opportunity for Reddit to capture larger portions of existing advertisers’ budgets.
In other recent news, Reddit has been the focus of several analyst updates concerning its advertising revenue and user activity. Citizens reiterated its Market Outperform rating for Reddit, maintaining a $300 price target, citing the platform’s potential for revenue growth as its advertising tools develop. Similarly, Cannonball Research increased its price target to $303, maintaining a Buy rating, and highlighted the possible impact of Dynamic Product Ads on future revenue growth. On the other hand, RBC Capital raised its price target to $245 from $210, despite maintaining a Sector Perform rating, due to observed growth in ad load compared to other social media platforms. However, concerns about declining daily active users were noted by RBC, which could impact Reddit’s user engagement metrics. These recent developments suggest a mixed outlook for Reddit, with analysts focusing on both its advertising potential and user activity trends.
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