Several positive analyst moves have increased the strength of the wind Reddit‘s (NYSE: RD) The stock price rose significantly in the last month of 2024. December saw shares of the already hot social media company rise more than 16%, cementing its position as one of the best performing games of the year.
Reddit It is one of the newest technology and social media stocks on the scene. It hit the market less than a year ago (in March 2024, to be exact, after completing its initial public offering, or IPO). Given this novelty and its near-instant popularity as an investment, many researchers have only recently begun tracking the stock.
Two notable figures started covering Reddit in December, both receiving fairly positive reviews. The first was the Big Four bank Wells Fargowhich rates it an Overweight (i.e. Buy) with a target price of $206 per share. Guggenheim came in second, with analyst Michael Morris also calling the company a buy at a price slightly higher ($210 per share) than fair value.
According to reports, Morris feels that Reddit will benefit from the overall growth in social media usage. It also has excellent potential to boost advertising revenue and will have opportunities to earn more coins from activities such as data licensing.
This optimism seems justified to me. Reddit’s revenue growth trajectory It was especially impressive, as the company was able to increase this rate in each of the three quarters in 2024 announced so far (by 48%, 54%, and 68%, respectively). The number of average daily “uniques” (read “users”), an important operational metric, continued to rise at rates well into the double-digit percentiles.
Also, somewhat unusually for tech stocks, Reddit has been profitable lately. It reported GAAP net income of just under $30 million in its most recently reported frame, after two straight quarters of losses.
This kind of performance does not escape the notice of researchers who already track Reddit’s fortunes. Several analysts from influential companies became noticeably more bullish on the stock in December, which helped support the upside of its purchase.
Among these was the white-shoe investment bank Morgan Stanleywhose analyst Brian Novak upgraded his recommendation to overweight with a price target of $200 per share. He had previously classified it as equal weight (hold). According to reports, his reasoning was similar to that of Guggenheim’s Morris.
Meanwhile, Ronald Jose from Citigroup He enacted a big raise to his price target on Reddit to $200 per share from its previous price of $120. Since this price level matches Morgan Stanley’s Nowak level, Josey also rates Reddit as a buy.
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Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Eric Folkman He has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has Disclosure policy.
Why Reddit Stock Crushed It in December Originally published by The Motley Fool