Analyst Doug Anmuth from J.P. Morgan maintained a Hold rating on Reddit Inc Class A (RDDT – Research Report) and increased the price target to $185.00 from $142.00.
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Doug Anmuth has given his Hold rating due to a combination of factors impacting Reddit Inc Class A’s stock. Despite strong progress in full-funnel advertising leading to significant revenue growth and profit improvements, there are concerns regarding the company’s reliance on Google traffic, which forms a substantial portion of Reddit’s user base. Recent changes in Google’s search algorithm and crawling issues have posed challenges to Reddit’s DAUq growth, particularly among U.S. logged-out users, although these did not affect logged-in users or fourth-quarter revenue.
Reddit’s ad revenue growth has been impressive, yet the competitive landscape in the digital ad space with giants like Google and Meta remains a challenge. While the potential for further growth is present, especially with Reddit’s plans for expanded advertiser scale and new ad formats, the current valuation appears elevated, and there is a need for more confidence in user growth trajectories. Therefore, while Reddit exhibits strong fundamentals, these uncertainties lead to a neutral stance, justifying the Hold rating with a price target increase to $185.
In another report released yesterday, Bank of America Securities also reiterated a Hold rating on the stock with a $190.00 price target.
Based on the recent corporate insider activity of 101 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RDDT in relation to earlier this year.