JPMorgan has raised its stock price target for Reddit, Inc. (NYSE:RDDT) to $145 from $110, while maintaining a Neutral rating. This adjustment reflects a notable shift in sentiment following Reddit’s impressive first-quarter performance and positive guidance for the second quarter.
The company reported a robust 61% year-over-year increase in revenue, reaching $392 million, with earnings per share (EPS) of $0.13, surpassing forecasts of $0.01.
Reddit’s strong financial health is underscored by its impressive gross profit margins and a cash-rich balance sheet. The platform’s advertising business has shown resilience against macroeconomic pressures, with projected second-quarter growth ranging between 46% and 53%. This growth is driven by a significant rise in daily active users internationally, attributed to improvements in machine translation capabilities.
JPMorgan’s revised estimates highlight Reddit’s ability to capture a larger share of advertiser budgets, driven by its full-funnel diversification strategy. The company is expected to see average revenue growth of 12% for 2025 and 2026, with adjusted EBITDA and free cash flow projected to increase by 33% and 34%, respectively.
Despite this optimism, some analysts suggest that Reddit’s stock is slightly overvalued at its current trading price. However, the company’s strategic initiatives, such as the rollout of new features and the anticipated launch of enhanced advertising products, are seen as potential catalysts for continued growth.
The price target increase by JPMorgan follows similar adjustments by other firms. Several analysts have raised their targets, maintaining positive outlooks on Reddit’s growth prospects.
These developments underscore Reddit’s position as a growing force in digital advertising and social media, with its ability to navigate market challenges and execute strategic growth plans being key to its future success.