Bank of America Securities analyst Justin Post has maintained their neutral stance on RDDT stock, giving a Hold rating on May 21.
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Justin Post has given his Hold rating due to a combination of factors influencing Reddit Inc’s current market position. One of the primary reasons is the recent launch of Dynamic Product Ads (DPA), which enhances Reddit’s eCommerce capabilities by allowing advertisers to target users with dynamically generated ads based on real-time product data. This development is expected to contribute to incremental revenue growth, particularly during the holiday shopping season.
However, concerns remain regarding Reddit’s dependency on Google for traffic, as approximately 40-50% of its traffic comes from Google, mostly from logged-out users. The integration of AI in Google’s search could potentially impact this traffic, creating uncertainty in the near term. Despite this risk, Reddit’s initiatives, such as the DPA, are anticipated to mitigate some of the adverse effects. Given these mixed factors, Justin Post maintains a Hold rating, reflecting a cautious but optimistic outlook on Reddit’s ability to navigate these challenges.
Post covers the Communication Services sector, focusing on stocks such as Alphabet Class A, Meta Platforms, and Alphabet Class C. According to TipRanks, Post has an average return of 22.5% and a 67.88% success rate on recommended stocks.
In another report released on May 21, Robert W. Baird also maintained a Hold rating on the stock with a $120.00 price target.
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