Reddit Shares Surge 7%, Hit Record High as Raymond James Raises Price Target

Reddit Inc. (RDDT) shares soared 7% on Monday, reaching an all-time high of $191 during midday trading. The social media platform's stock price has been on a tear since its initial public offering (IPO) in October 2024, with shares up over 146% year-to-date. The latest surge in Reddit's stock price comes on the heels of Raymond James analysts raising their price target for the company to $200 from $150 and reiterating their "strong buy" rating.

Raymond James analysts cited Reddit's expanding partner base and strong user growth as key factors contributing to the company's outperformance. Reddit's partnership with Alphabet (GOOGL) boosts content discovery and community engagement by providing access to Reddit's Data API. Additionally, Reddit announced the testing of "Reddit Answers," an AI-powered chatbot leveraging models from Reddit, Google, and OpenAI to provide users with curated summaries, links to discussions, and community recommendations. These partnerships and initiatives are expected to drive user engagement and ad performance across multiple channels.

Reddit's strong user growth and improved advertising performance have been key drivers of the company's stock price appreciation. The platform's daily active users (DAUs) surged 47% year over year, reaching over 97 million DAUs and surpassing the milestone of 100 million DAUs for the first time during the third quarter. Reddit's advertising business grew 56% year over year to $315.1 million in the third quarter of 2024, driven by higher impressions, more efficient ad placements, and expanded conversation placement ads. The increase in ad impressions and the expansion of conversation placement ads helped drive engagement, as evidenced by a 40% year-over-year increase in conversation pageviews in the third quarter.

Reddit's earnings estimates for 2025 show upward movement, with the Zacks Consensus Estimate for revenues pegged at $1.71 billion, indicating year-over-year growth of 33.87%. The Zacks Consensus Estimate for 2025 earnings is pegged at 68 cents per share, which has increased by a couple of pennies in the past 30 days. This figure indicates a year-over-year increase of 119.51%. Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Reddit Inc. price and consensus chart

Reddit Inc. shares were up over 7% to $168 in afternoon trading Monday after paring back some gains earlier in the session. The company's stock price has been on a rollercoaster ride since its IPO, with shares surging over 7% on Monday following Raymond James' price target increase and rating upgrade. Reddit's strong user growth, expanding advertising business, and strategic partnerships have contributed to the company's impressive stock price performance. As Reddit continues to grow and expand its reach, investors may want to consider adding the social media platform to their portfolios. However, it's essential to keep in mind that Reddit's stock is not cheap, with a Value Score of F and a trailing 12-month Price/Book ratio of 14.63, higher than its median of 6.66 and the broader Zacks Computer & Technology sector's 10.43.