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Investing.com - Truist Securities raised its price target on Reddit (NYSE:RDDT) to $270.00 from $260.00 on Friday, maintaining a Buy rating following the company’s third-quarter results. The stock currently trades at $227.48, with a P/E ratio of 198.43, suggesting it may be overvalued according to InvestingPro Fair Value estimates.
The price target increase comes after Reddit delivered what Truist described as a "strong 3Q beat" and provided fourth-quarter guidance that "comfortably exceeds consensus" expectations.
Truist attributed Reddit’s performance to "broad-based strength across verticals, geos, and channels" along with a stable macroeconomic environment, strong user engagement, and continuous product improvements that are driving solid advertiser onboarding across both direct response and brand advertising.
The firm noted that Reddit’s total user count at the end of the third quarter was higher than the average for the period, suggesting good momentum heading into the fourth quarter.
Truist also highlighted that Reddit remains in early stages with several key initiatives driving its "superior growth and market share gains," including Search & Answers, Shopping Ads, and Automation features.
In other recent news, Reddit has reported strong financial results, with its latest quarterly earnings exceeding expectations. The company achieved revenue that surpassed its guidance by $40 million, driven by a 74% year-over-year increase in advertising revenue. Analysts from Citizens described this as "another stellar quarter" for the platform. Meanwhile, RBC Capital noted that Reddit’s revenue performance was impressive, despite a slowdown in U.S. daily active users, though there was an acceleration in September.
Several investment banks have also updated their ratings and price targets for Reddit. Morgan Stanley raised its price target to $250, citing improvements in automation and ad formats as key growth drivers. Jefferies maintained its Buy rating with a $300 price target, highlighting Reddit’s strong financial performance and growth potential. Goldman Sachs adjusted its price target to $238, emphasizing the company’s efforts in converting users through personalization and improved onboarding experiences.
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