By Angela Palumbo
Reddit stock was rising Monday after a Seaport Research analyst upgraded shares of the social networking company on confidence in its long-term opportunities.
Aaron Kessler upgraded shares of Reddit to Buy from Neutral and gave the stock a $165 price target on Monday, which implies a 45% increase from the stock's closing price of $113.83 on Friday.
"We continue to expect solid long-term user growth and meaningful revenue/monetization growth," Kessler wrote.
Kessler's upgrade comes after Reddit reported first-quarter financials after the stock market closed on May 1. Earnings and revenue both came in above Wall Street estimates, initially sending shares higher in after-hours trading. But the stock closed down 4.2% on Friday after management noted it was seeing signs of slowing daily active user growth in the second quarter as Google makes changes to its search functions.
"While near-term user growth is likely to decelerate, we remain positive on long-term user growth," Kessler said. "We believe increasing logged-in users as well as Reddit becoming a stronger brand over the last few years (6th most Googled search term) should continue to drive healthy long-term user growth in the U.S."
Other Wall Street analysts are also optimistic about Reddit's future. Of the 28 surveyed by FactSet, 18 say the stock is a Buy, nine say it's a Hold, and one recommends selling.
Truist Securities analyst Youssef Squali rates Reddit as a Buy with a $160 price target. He wrote on May 1 that, while external search changes are creating near-term headwinds for daily active user growth, "RDDT has several key initiatives, including Search & Answers, which should fuel user growth and engagement over time." Reddit Answers allows users to ask questions to an artificial-intelligence powered conversational interface.
Shares of Reddit rose 4.5% to $118.95 on Monday while the S&P 500 dropped 0.1%. The stock has fallen 27% this year.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 05, 2025 14:54 ET (18:54 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.