Reddit CEO Steve Huffman stands on the floor of the New York Stock Exchange (NYSE) after ringing the floor bell to set the stock price at $47 in its initial public offering (IPO) on March 21, 2024 in New York City.
Spencer Platt | Getty Images News | Getty Images
Reddit Shares rose more than 7% to a record high on Tuesday after Raymond James analysts raised their price targets and affirmed a “strong buy” rating for the social media platform.
The company's shares hit $191 during midday trading, surpassing its previous high of $182 on January 6. Reddit shares topped $100 for the first time in late October after the company's announcement. Financial results for the third quarter Which exceeded Wall Street expectations.
Raymond James analysts said in a note on Tuesday that they would raise their price target on Reddit to $200 from $150, largely because of their “conviction” that Reddit can expand its business internationally.
The company plans to attract more users outside its core US market as it looks to expand its advertising business, Reddit's chief operating officer, Jin Wong, told CNBC in November. Reddit sales for the third quarter, which is mostly Online advertisingup 68% year over year to $348.4 million.
Raymond James analysts wrote that Reddit's increasing use of artificial intelligence to automatically translate its site text into various languages such as Portuguese, French, Spanish, Filipino, and German “should help improve Reddit's local search rankings and provide lasting hypergrowth.”
The company's AI translation efforts are key to its international expansion, Wong told CNBC in November. She said Reddit's fastest-growing regions in terms of users include the UK, Philippines, India and Brazil.
“This points to a lot of future user growth opportunities certainly outside the US and the local language,” Wong said. “Every language is an opportunity for another Redditor.”
The company also remains one of the top five search sites, Raymond James analysts said, citing research firm SameWeb. The analysts wrote that Reddit's “uniquely authentic and curated content (community system)” will help the company stay at the top of search results, ultimately leading to more Reddit users creating accounts.
Reddit makes more money from logged in users who have accounts rather than logged out users, who have been visiting the platform more frequently over the past year due to internal improvements to the site and a change to Google's previous search algorithm that favored “authentic” content.
Raymond James analysts noted in a special section on “Risks” that Reddit may suffer from “unfavorable updates to Google’s search algorithms” that push Lower position in search results And slower rates of converting those logged out users to their more financially lucrative registered counterparts.
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