Reddit Price Target Upgraded As Stock (RDDT) Begins To Find Support

Reddit's stock (RDDT) has been given a boost by Wall Street, with a bullish upgrade from Morgan Stanley coming off the back of a 4% gain in the most recent session. The firm raised its price target for RDDT to $170 from $154, reaffirming its Overweight rating on the stock.

This upward revision reflects a broader, more optimistic outlook on the internet sector, propelled by a strengthening macroeconomic environment and easing trade tensions with China. With Reddit's stock price continuing to trade negative YTD, down 10.65%, recent support at the $140 level, alongside analyst upgrades have given bulls confidence that a turnaround in the second half may be on the cards.

Morgan Stanley's analysts cited a confluence of factors underpinning their positive outlook. They emphasized the improved macroeconomic backdrop, suggesting that a healthier global economy will fuel increased advertising spending, a critical revenue driver for Reddit. Furthermore, the anticipated reduction in China tariffs is expected to benefit the broader technology sector, indirectly bolstering Reddit's growth prospects. Notably, Morgan Stanley also extended its valuation horizon to mid-year 2026, signaling a long-term confidence in Reddit's ability to sustain its growth trajectory.

The recent price target increase from Morgan Stanley aligns with a generally positive, albeit somewhat varied, sentiment from other leading analysts. While opinions on RDDT's valuation differ, the consensus among analysts remains a “Buy” rating.

The average analyst price target currently sits close to current price action at $147.97, with individual targets ranging from a conservative $75 to an ambitious $220.

Needham, for instance, maintains a Buy rating with a $220 price target, reflecting their belief in the company's growth potential. However, Piper Sandler recently lowered their price target to $140, citing concerns about Daily Active Users (DAUs) following Google's December Core update, but still maintaining an Overweight rating. This divergence highlights the inherent uncertainties and varying perspectives surrounding Reddit's future performance.

Technically, RDDT appears to be in a strong position. The stock is trading comfortably above both its 50-day ($126.36) and 200-day ($134.13) Simple Moving Averages (SMAs), indicating a sustained upward trend. The 14-day Relative Strength Index (RSI) of 49.70 suggests that the stock is neither overbought nor oversold, leaving room for further price appreciation. However, it's important to note the stock's volatility, which has averaged 9.77% over the past 30 days.

The market is eagerly anticipating Reddit's upcoming Q1 2025 earnings report. Analysts predict continued robust revenue growth, building on the impressive 61.5% year-over-year increase reported in the last quarter. This growth is expected to be driven by increased advertising revenue, as well as potential contributions from new initiatives, such as data licensing agreements and expansion into new markets.

Despite the overall positive outlook, competition in the social media landscape is fierce, with established players like Facebook, Instagram, and TikTok vying for user attention and advertising dollars.The fluctuating macroeconomic environment, DAU's and potential changes in user growth trends, and search algorithms could also impact the company's financial performance.