Reddit’s Stock Soars: A New Star in the Tech Universe
A Stellar Performance in December
The final month of 2024 proved to be a remarkable one for Reddit’s (NYSE: RDDT) share price, which surged by over 16% and solidified its position as one of the top-performing stocks of the year. This impressive feat is all the more notable given that Reddit is a relatively new player in the tech and social media space, having gone public less than a year ago in March 2024.
Analysts Weigh In
December saw two prominent analysts initiate coverage of Reddit, both with optimistic outlooks. Wells Fargo assigned an overweight rating, equivalent to a buy recommendation, with a price target of $206 per share. Guggenheim’s Michael Morris also tagged the company as a buy, with a slightly higher fair value assessment of $210 per share. Morris believes Reddit will benefit from the growing social media landscape, as well as opportunities to boost ad revenue and generate income from data licensing.
Impressive Revenue Growth
Reddit’s revenue growth trajectory has been nothing short of impressive, with the company achieving sequential growth rates of 48%, 54%, and 68% in the three quarters reported thus far in 2024. Moreover, the daily average user count has continued to rise at double-digit percentages, a testament to the platform’s enduring popularity. What’s more, Reddit has managed to turn a profit, booking a GAAP net income of nearly $30 million in its most recent quarter, following two consecutive quarters of losses.
A Bullish Outlook
Several influential analysts have become increasingly optimistic about Reddit’s prospects, lending further support to the bull case for buying the stock. Morgan Stanley’s Brian Nowak upgraded his recommendation to overweight, citing similar reasons to Guggenheim’s Morris. Meanwhile, Citigroup’s Ronald Josey drastically raised his price target to $200 per share, matching Morgan Stanley’s Nowak, and also rating Reddit a buy.
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