Reddit Inc’s Growth Potential: Buy Rating Driven by User Engagement and International Expansion

Analyst John Colantuoni from Jefferies maintained a Buy rating on Reddit Inc Class A (RDDT – Research Report) and decreased the price target to $170.00 from $225.00.

John Colantuoni has given his Buy rating due to a combination of factors that highlight Reddit Inc’s potential for significant growth. One of the primary reasons is the expected increase in daily active users (DAUs), driven by higher engagement among casual users in the U.S. and expansion in international markets. The analysis suggests that Reddit can improve its user engagement metrics to match those of other social platforms, which could lead to a doubling of U.S. DAUs by 2030 through enhancements in recommendation algorithms and content discovery.
Additionally, Reddit’s international growth prospects are promising, with the potential for international DAUs to contribute significantly to overall user growth. This is supported by efforts to translate content into multiple languages, which could help Reddit capture a larger share of internet users in its focus markets. Furthermore, there is a monetization upside, as Reddit is expected to exceed the current average revenue per user (ARPU) of similar platforms like Pinterest by 2033. These factors, combined with sustainable user growth, are anticipated to bolster Reddit’s long-term opportunities, despite potential short-term macroeconomic challenges.

According to TipRanks, Colantuoni is a 4-star analyst with an average return of 6.1% and a 58.20% success rate. Colantuoni covers the Consumer Cyclical sector, focusing on stocks such as eBay, Airbnb, and ACV Auctions.

In another report released today, JMP Securities also reiterated a Buy rating on the stock with a $155.00 price target.