Buy Rating Affirmed for Reddit Inc Class A on Strong Growth and User Engagement

Raymond James analyst Josh Beck reiterated a Buy rating on Reddit Inc Class A (RDDT – Research Report) yesterday and set a price target of $65.00.

Josh Beck has given his Buy rating due to a combination of factors that indicate Reddit Inc Class A is in a strong growth phase, with an impressive performance in its first public quarter. The company surpassed both the median Street expectations and the buy-side’s predictions, particularly with its U.S. daily active users (DAUq) count that significantly exceeded forecasts. Beck’s positive outlook is further supported by Reddit’s robust DAUq growth, which is a result of improved website performance, more relevant machine learning algorithms, and a focus on Google forums and discussions.

Beck’s conviction in Reddit’s growth trajectory is also reflected in his raised estimates for the company’s 2024 and 2025 revenue and EBITDA, which are a direct consequence of the platform’s outperformance. The potential for daily active user growth, average revenue per user (ARPU) expansion, and the prospects of new data licensing agreements with GenAI contribute to Beck’s strong buy recommendation. Despite the uncertainties in the market, such as inflation and geopolitical tensions, Beck’s analysis indicates that Reddit’s user growth has been consistent and its cost growth has been contained, positioning the company favorably for the coming years.

In another report released today, JMP Securities also reiterated a Buy rating on the stock with a $63.00 price target.

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Reddit Inc Class A (RDDT) Company Description:

Reddit is home to thousands of communities, endless conversation, and authentic human connection. Whether you’re into breaking news, sports, TV fan theories, or a never-ending stream of the internet’s cutest animals, there’s a community on Reddit for you.