Reddit stock price target raised to $300 from $225 at JMP

Investing.com - JMP Securities has reiterated its Market Outperform rating on Reddit (NYSE:RDDT) while raising its price target to $300 from $225, representing a significant increase in valuation for the social media platform. The stock, currently trading near its 52-week high of $270.36, has delivered an impressive 318% return over the past year. According to InvestingPro analysis, Reddit’s current market capitalization stands at approximately $50 billion, with metrics suggesting the stock is trading above its Fair Value.

The firm based its new price target on approximately 57 times its 2026 estimated EBITDA of $2.7 billion, up from the previous multiple of about 43 times. JMP justified the premium valuation compared to industry peers by citing Reddit’s significantly faster growth rate and multiple potential catalysts ahead. InvestingPro data shows Reddit’s current revenue growth at nearly 70%, with the company maintaining strong financial health metrics. For deeper insights into Reddit’s valuation and growth metrics, along with 20+ additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.

JMP highlighted Reddit’s focus on achieving over 50% incremental margins in the near term, noting that the platform’s digital advertising and incremental data sales carry margins of more than 90%. This aligns with InvestingPro data showing Reddit’s impressive gross profit margin of 91.04% in the last twelve months, supporting the company’s strong profitability potential.

The analyst report acknowledged Reddit’s ongoing investments across its platform, particularly in sales, where approximately 70% of the 100 employees added last quarter were sales personnel. Despite these investments, Reddit expects its pro forma total cost growth to increase in the high-30% range year-over-year in the second half of 2025.

JMP expects Reddit’s cost growth to slow over time with the maturation of self-service ad buying products, contributing to the company’s improving margin profile.

In other recent news, Reddit Inc. is reportedly in early discussions with Alphabet Inc.’s Google to establish a new content-sharing agreement aimed at enhancing integration with Google’s AI products. This potential partnership comes as Reddit seeks to leverage its data for increased value in search results and AI training. Meanwhile, several investment firms have adjusted their price targets for Reddit’s stock, reflecting optimism about the company’s future prospects. Oppenheimer has raised its price target to $300 from $215, maintaining an Outperform rating, citing higher estimates and potential AI licensing benefits. Needham also increased its target to $300, attributing the rise to generative AI and improved labor productivity. Similarly, Jefferies raised its price target to $300, highlighting the sustainability of Reddit’s revenue growth and stable daily active user trends. On a different note, RBC Capital has maintained its Sector Perform rating with a price target of $210, focusing on ad load analysis and potential expansion opportunities. These developments indicate a growing confidence among analysts in Reddit’s strategic initiatives and market positioning.

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