What Happened?
Shares of online community and discussion platform Reddit (NYSE:RDDT) jumped 12.3% in the morning session after Loop Capital analysts provided bullish projections following the stock's recent declines. The analysts said Reddit had "the biggest upside potential relative to Street estimates in our coverage universe." As a result, the analysts reiterated a Buy rating and raised their price target from $180 to $210. The new price target implied more than a 78% upside from where shares traded before the revised rating.
The shares closed the day at $123.01, up 15.1% from previous close.
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What The Market Is Telling Us
Reddit’s shares are extremely volatile and have had 62 moves greater than 5% over the last year. But moves this big are rare even for Reddit and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 27 days ago when the stock dropped 19.8% on the news that the company reported mixed fourth-quarter results: revenue, EPS, and EBITDA all outperformed Wall Street's estimates, but lower-than-anticipated domestic user growth weighed on investor sentiment. Reddit also provided optimistic revenue and EBITDA guidance for the next quarter, which blew past analysts' expectations. Overall, it was a decent quarter with its GAAP financial metrics above expectations, but the lower-than-anticipated domestic user additions sent shares lower.
Reddit is down 25.9% since the beginning of the year, and at $123 per share, it is trading 45.4% below its 52-week high of $225.23 from February 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 $2,439.
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