Reddit shares advanced approximately 2% to $142.68 during morning trading on Friday, recovering some ground after a significant drop following the company's quarterly earnings release. The stock fluctuated between $137.09 and $145.75 in early session volatility.
Divergent Analyst Outlooks
Wall Street firms offered contrasting assessments following Reddit's financial report. Truist raised its price target to $275, maintaining a buy rating and highlighting the platform's role in authentic conversations amid generative AI expansion. Conversely, Piper Sandler reduced its target to $205 from $290, citing concerns about valuation multiple contraction. Guggenheim increased its target to $255, while Morgan Stanley maintained a buy rating but trimmed its target on a more cautious user growth outlook.
Goldman Sachs lowered its target to $206, noting that while user numbers increased, much of the growth came from non-logged-in visitors. The firm identified converting these visitors into authenticated users as a key challenge alongside balancing growth with increased spending on brand advertising, sales team expansion, and AI licensing.
Quarterly Performance and Outlook
Reddit reported fourth-quarter revenue of $726 million, representing a 70% year-over-year increase. Daily active unique users grew 19% to 121.4 million. The company's board authorized a share repurchase program of up to $1 billion. For the current quarter, Reddit provided revenue guidance between $595 million and $605 million, attributing expected growth to AI-powered advertising products.
Market participants are monitoring whether recent user metrics are exerting more influence on the stock than advertising product advancements. Analyst attention has shifted toward logged-in user growth and its impact on ad-targeting capabilities.
Broader market focus returns to macroeconomic indicators, with the January U.S. jobs report scheduled for February 11 and Consumer Price Index data due February 13. These releases are viewed as significant catalysts for high-growth stocks in the coming sessions.
