Reddit stock price target raised to $250 from $225 at Raymond James

Investing.com - Raymond James raised its price target on Reddit (NYSE:RDDT) to $250 from $225 while maintaining a Strong Buy rating. The social media platform, currently trading at $194.95 with a market cap of $36.49B, has demonstrated impressive growth with revenue reaching $1.67B in the last twelve months. According to InvestingPro analysis, Reddit is currently trading above its Fair Value.

The firm’s updated bottom-up ARPU (Average Revenue Per User) analysis outlines a $100 U.S. logged-in ARPU bull case. This projection is driven by moderate increases to ad load, significant improvements in CPMs (cost per thousand impressions), and potential benefits from on-platform AI search lifting query volume. The company’s impressive 91.04% gross profit margin and 70% year-over-year revenue growth support this optimistic outlook.

Raymond James noted recent agency checks showing CPMs of $6+ for e-commerce focused campaigns with targeting, representing triple-digit year-over-year growth. Their updated campaign manager analysis suggests a more conservative estimate of around $4 for generic campaigns without keyword targeting, up from their previous $2 estimate. InvestingPro subscribers can access 15+ additional investment tips and a comprehensive Pro Research Report for deeper insights into Reddit’s financial health and growth prospects.

The firm’s model assumes home feed ad load will rise from 13% to 17%, which remains well below peers that operate in the 25-50% range. For context, Raymond James currently estimates approximately $2 revenue per thousand impressions (RPM) for U.S. logged-in users with a bull case of ~$6, compared to a peer average of $5.

Raymond James also projects that Reddit’s AI Search/Answer feature could increase monthly queries from 1.5 billion to 4 billion, with a 25% ad load and less than 1% click-through rate at $1 cost-per-click, potentially creating a $350 million revenue opportunity that currently has no ad units.

In other recent news, Reddit has been the subject of various analyst reports highlighting its advertising momentum and future potential. Citizens Financial maintained its Market Outperform rating and a price target of $300, citing strong advertising effectiveness, particularly for products with long-consideration purchase paths. The firm also noted a decline in global time spent on the platform year-over-year for the third consecutive quarter. Meanwhile, Truist Securities raised its price target for Reddit to $260 from $225, maintaining a Buy rating. This adjustment was based on anticipated strong third-quarter 2025 results and fourth-quarter guidance. Despite recent concerns over declining daily active users and reduced citation share on ChatGPT, Reddit’s advertising monetization potential remains a focal point for analysts. Citizens analyst Andrew Boone reiterated his confidence with a Market Outperform rating and a $300 price target. These developments reflect ongoing interest and varying perspectives from financial analysts regarding Reddit’s future performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.