Justin Post, an analyst from Bank of America Securities, maintained the Hold rating on Reddit Inc Class A (RDDT – Research Report). The associated price target remains the same with $190.00.
Justin Post has given his Hold rating due to a combination of factors that reflect both the potential and the challenges facing Reddit Inc Class A. The company is in the early stages of developing its content and advertising platform, with promising initiatives like the new search format, Answers, which aims to enhance user engagement and search monetization. Reddit’s management is optimistic about converting its large base of weekly users into more frequent daily active users, which could significantly boost user engagement and platform growth.
Despite these growth opportunities, the stock is currently valued at a premium compared to its peers, which introduces a risk of valuation compression, especially if there are macroeconomic pressures affecting revenue. Additionally, while Reddit has a strong pipeline of advertising initiatives, the monetization process, particularly for search, is expected to be gradual. These factors contribute to the Hold rating, as the potential for growth is balanced by the risks associated with its current valuation and the time required to fully realize its monetization strategies.
Post covers the Communication Services sector, focusing on stocks such as Alphabet Class A, Meta Platforms, and Snap. According to TipRanks, Post has an average return of 22.8% and a 68.28% success rate on recommended stocks.