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Reddit Stock Hits Record High After Upgrade From Morgan Stanley on Its Growth Potential
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Main points
- Reddit shares hit an all-time high on Monday after a Morgan Stanley analyst upgraded the stock and highlighted how Reddit could grow through 2025.
- Reddit’s user base has grown faster than analysts expected this year, and there are ways to continue growing, including working with Google to direct searches to Reddit links.
- Analysts wrote that as Reddit’s user base grows and new advertising tools are developed, the platform may become a more attractive advertising destination.
reddit(RDDTShares of the social media stock climbed to a record high on Monday after analysts at Morgan Stanley upgraded the stock, citing “multiple levers” for potential growth through 2025.
Analysts said they were wrong to be “on the sidelines” on the stock’s growth since it went public. Initial Public Offering (IPO) earlier This year. They raised their price target to $200 from $70 and upgraded the stock to “Overweight” comes from “equal weight” Highlights new tools and products that could help Reddit grow its user base and ad revenue over the next year.
Reddit’s user base and ad tech expected to continue growing
“In effect, RDDT is delivering engagement and advertising products at a rapid pace and has multiple levers to drive outsized growth,” analysts wrote on Sunday.
Reddit’s Daily active users DAU is growing about 20% faster than Morgan Stanley’s model predicts, and analysts say they expect Reddit’s user base to continue to grow with the time users spend on the platform. They noticed improved search and Partnership with Alphabet (Google) Google attracts more users using Reddit links as a tool to attract new users.
A larger user base spending more time on the platform would also make Reddit more attractive to advertisers, which could bring Reddit’s ad pricing closer to competitors like Google and Meta (Mehta), analysts wrote. Reddit may also launch a series of ad-focused products with greater automation and Artificial Intelligence (AI)– Features coming next year.
Separately, Reddit on Monday announced a new search feature and a soft launch of “Reddit Answers.” A “limited number of users in the U.S.” will be the first to access the AI ​​tool, which answers questions with a summary of Reddit threads on the topic and highlights popular answers from Reddit commenters with links for users to read More thread content.
Reddit shares rose more than 3% to $168 in afternoon trading on Monday after giving back some of their gains earlier in the session.
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