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On Friday, Citizens JMP analyst Andrew Boone increased the price target for Reddit (NYSE:RDDT) to $180, up from the previous $155, while maintaining a Market Outperform rating. The new target sits well above the current trading price of $118.79, though InvestingPro analysis suggests the stock is slightly overvalued at current levels. The adjustment follows Reddit’s recent financial report, which exceeded expectations with a significant revenue beat and a strong outlook for the upcoming quarter.
Reddit’s latest earnings report revealed a revenue surge that was $22 million higher than the most optimistic forecasts, marking a 6% increase. The company’s advertising revenue grew by an impressive 61% year-over-year (Y/Y), contributing to total revenues of $1.3 billion in the last twelve months. With an exceptional gross profit margin of 90.49%, Reddit has demonstrated strong operational efficiency. Additionally, Reddit has provided guidance anticipating a 49% Y/Y revenue growth for the second quarter of 2025, despite facing tougher comparisons from previous periods.
Despite a deceleration in daily active user (DAU) growth, which slowed to the high-teens in April from a 31% Y/Y growth in the first quarter of 2025, Boone highlighted Reddit’s advertising platform improvements as a key factor in driving enhanced results and better monetization. The analyst pointed out that Reddit’s limited exposure to the Chinese market and the retail sector minimizes its risk of adverse impacts from a potential downturn in retail advertising spending. InvestingPro data reveals 12+ additional insights about Reddit’s financial health and growth potential, available to subscribers.
Boone also noted the potential for further growth through Reddit’s ad enhancements and international expansion throughout 2025. Furthermore, the monetization of the platform’s Answers feature is expected to become a more significant contributor to revenue in 2026. These factors, according to Boone, position Reddit to capitalize on growth opportunities irrespective of broader economic conditions. For a comprehensive analysis of Reddit’s growth prospects and valuation metrics, access the detailed Pro Research Report available on InvestingPro.
The revised price target from Citizens JMP reflects the firm’s increased estimates based on Reddit’s strong performance and promising growth drivers. Reddit’s strategic focus on improving its advertising capabilities and expanding its global reach are anticipated to continue supporting the company’s financial success moving forward.
In other recent news, Reddit Inc. reported its Q1 2025 earnings, showcasing significant growth with a 61% increase in revenue year-over-year, reaching $392 million. The company also achieved an earnings per share (EPS) of $0.13, surpassing the forecasted $0.01, reflecting strong financial performance. Citi analysts responded by lifting their price target for Reddit to $158, citing the company’s robust ad revenue growth and increased daily active users. Similarly, JPMorgan and Goldman Sachs raised their price targets to $145 and $140, respectively, while maintaining Neutral ratings, highlighting Reddit’s strong revenue growth and user engagement.
Bernstein SocGen Group upgraded Reddit’s stock rating from Underperform to Market Perform, increasing the price target to $130. This adjustment was based on Reddit’s solid management performance and ability to navigate a volatile market environment. Despite some concerns about potential slowdowns in user growth due to changes in Google (NASDAQ:GOOGL)’s algorithm, analysts remain optimistic about Reddit’s revenue trajectory. The company’s advertising revenue saw a notable 61% year-over-year increase, driven by a growing number of active advertisers and new features like Reddit Answers.
Looking ahead, Reddit projects Q2 2025 revenue between $410 million and $430 million, representing a 46-53% year-over-year growth. The company continues to focus on product improvements and international expansion, with anticipated launches such as Direct Purchase Ads expected to drive further growth. Reddit’s strategic moves and strong execution have contributed to a positive outlook, as reflected in the revised price targets and ratings from various analyst firms.
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