Key Takeaways
- Bank of America raised its price target for Reddit Monday, a day before the social media company’s first earnings report since going public.
- BofA boosted its price target for Reddit to $50 per share from $46.
- The analysts suggested Reddit’s revenue could exceed estimates, and they raised their longer-term outlook for the firm.
Reddit (RDDT) shares edged higher Monday as Bank of America (BAC) analysts raised their price target on the stock, anticipating “opportunity for upside” when the social media company reports first-quarter earnings Tuesday, its first earnings report since its initial public offering (IPO).
Price Target Lifted to $50 From $46
Bank of America lifted its price outlook to $50 per share from the previous $46, while maintaining its “neutral” rating for the company’s stock. By 3 p.m. ET Monday, the stock had risen to $47.56, a gain of close to 2%.
The analysts said they anticipate Reddit could beat the bank’s revenue estimate of $212 million, which is 29% higher than the year-ago quarter, with ad revenue at $199 million, a 21% increase year-over-year (YOY).
Expecting Jump in Daily Active Users to 77 Million
Bank of America also predicted a 28% YOY jump in Daily Active Users (DAU) to 77 million, and pointed to data that suggested “Reddit’s relevancy & speed initiatives are driving increased activity.”
BofA boosted its estimates for earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue in the current quarter “to reflect slightly higher user growth & monetization.” The analysts also boosted their EBITDA and revenue expectations for 2024 and 2025.
Shares of Reddit began publicly trading on March 21, and after hitting their all-time high less than a week later, they declined to an all-time closing low last month on April 17. They’ve rallied since then, but remain below the $50.44 they closed at on their first day of trading.
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