Reddit Stock: Analyst’s Top Social Media Pick, But Price Target Lags

Reddit's stock (NYSE:RDDT) is drawing increased attention as Roth Capital names it their number one social media pick, despite market fluctuations influenced by factors ranging from AI integration to legal battles. This endorsement arrives amidst a complex landscape of financial performance, strategic initiatives, and evolving market perceptions.

The firm maintains a Neutral rating on Reddit with a price target of $185, a decision that follows the company's impressive second-quarter results. Roth Capital anticipates continued positive performance, projecting potential growth into the latter half of 2025 driven by enhanced monetization strategies.

They also highlighted that streamlining account creation processes could unlock additional growth opportunities.

Reddit's stock has shown a year-to-date increase of 18.77%, and trading at $198.85, remains firmly above the Roth price target.

In early October, the stock experienced a notable decline, with shares dropping 11.91% to $202.60 the 1st of the month. This downturn was attributed to reports of decreasing daily active users (DAUs) and a reduced frequency of Reddit content citations by AI models, such as OpenAI's ChatGPT.

Data revealed that Reddit's citation share in ChatGPT responses had fallen from 29.2% to 5.3%. Despite these concerns, analysts remain optimistic, pointing to Reddit's robust advertising growth and data licensing deals as mitigating factors that support future growth.

Reddit has become a pivotal platform for brands seeking to engage with audiences and manage their public image as AI technologies increasingly incorporate diverse online sources. Major companies, including Sonos, GM, Spotify, Fidelity, and Wayfair, actively utilize Reddit to address customer concerns and manage public perception. A study by the marketing firm Profound indicates that Reddit is the second-most cited source for several top large language models (LLMs), trailing only YouTube. This prominence highlights the platform's strategic importance in the rapidly evolving digital landscape.

Reddit's financial performance has been strong, demonstrating a 61% year-over-year revenue increase to $392.4 million in Q1 2025, achieving profitability with a net income of $26.2 million. Daily Active Uniques rose 31% to 108.1 million users. 

The latest note comes with mixed messages, as a top pick in the sector, and a price target below current price action. The firm is expecting upside in earnings, and solid guidance.