What Happened?
Shares of online community and discussion platform Reddit (NYSE: RDDT) jumped 4.4% in the morning session after Evercore ISI initiated coverage of the social media company with an "Outperform" rating and a $320 price target.
The price target represented about 30% upside from the stock's previous trading price. In its report, the analyst noted that the platform had more room to turn its user engagement into revenue. Evercore ISI projected a strong growth profile for Reddit, forecasting a three-year revenue compound annual growth rate of 30%-40%. This outlook was supported by the company's development of new AI features and more advanced ad products, which were expected to fuel its expansion.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 59 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock gained 3.8% on the news that bullish analyst commentary highlighted the company's strong growth and favorable position in the artificial intelligence sector.
Several investment firms, including Piper Sandler, Needham & Co, and Jefferies, recently reiterated their "Buy" or equivalent ratings. The Jefferies team set a particularly high price target of $325, implying significant potential upside. Analysts pointed to a shift in how internet discovery was evolving, with users turning more to AI-generated answers. Reddit's content was frequently cited in these responses, making its data highly valuable. This created a potential new revenue opportunity through data licensing agreements that may not have been fully priced into the stock. The positive outlook was supported by the company's strong financial performance, which included a 400% year-over-year increase in earnings per share in the most recent quarter and revenue growth of nearly 68%. The move also occurred as the broader market showed strong buying interest in AI-linked stocks.
Reddit is up 6.5% since the beginning of the year, and at $257.54 per share, it is trading close to its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $5,106.
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