Reddit's stock surged over 7% on Tuesday (Wednesday AEDT), reaching an all-time high after Raymond James analysts raised their price target and reaffirmed a "strong buy" rating for the social media platform.
Shares of the company climbed to US$191 (A$304.62) during midday trading, surpassing its previous peak of $182 set on 6 January. This milestone follows Reddit’s earlier breakthrough in late October, when its stock surpassed $100 after the release of robust third-quarter financial results that exceeded Wall Street expectations.
In a note issued on Tuesday, Raymond James analysts increased their price target for Reddit from $150 to $200, citing confidence in the platform's potential to expand internationally.
Third-quarter revenues, driven mainly by online advertising, rose by 68% year-over-year to $348.4 million. The company is leveraging artificial intelligence to translate site content into multiple languages, including Portuguese, French, Spanish, Filipino, and German. Analysts noted this approach would likely enhance Reddit's local search rankings and fuel sustained growth in new markets.
Furthermore, Reddit remains among the top five most-searched websites globally, according to SimilarWeb data. Analysts attributed this success to Reddit's uniquely moderated community-driven content, which enhances search visibility and encourages account creation.
However, the analysts warned of potential risks, including unfavourable changes to Google’s search algorithms that could lower Reddit’s ranking. Additionally, while Reddit has seen increased activity from logged-out users, slower conversion rates to logged-in users - who generate more revenue - could pose a challenge.
At the time of writing, Reddit (NYSE: RDDT) stock was trading at US$188.4, easing up 7.5% from Friday's close of $175.3. The stock reached a day low of $175.6 and a day high of $191. Reddit maintains a market cap of US$33.05 billion (A$52.73 billion).
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