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Reddit CEO Steve Huffman stands on the floor of the New York Stock Exchange (NYSE) after ringing a bell on the floor setting the stock price at $47 in its initial public offering (IPO). on March 21, 2024 in New York City.
Spencer Platt | Getty Images News | fake images
reddit Shares rose more than 7% to a record high on Tuesday after analysts at Raymond James raised their price target and reiterated their “strong buy” rating for the social media platform.
The company’s shares hit $191 during midday trading, surpassing a previous high of $182 on Jan. 6. Reddit shares surpassed $100 for the first time in late October after the company reported third quarter financial results which exceeded Wall Street’s expectations.
Analysts at Raymond James said in a note Tuesday that they would increase their Reddit price target from $150 to $200, largely due to 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 COO Jen Wong told CNBC in November. Reddit’s third quarter sales, which are predominantly online advertisingincreased 68% year over year to $348.4 million.
Reddit’s increasing use of artificial intelligence to automatically translate text on its site into different languages such as Portuguese, French, Spanish, Filipino, and German “should help improve Reddit’s local search rankings and provide lasting hypergrowth,” wrote Raymond James analysts.
The company’s AI translation efforts are key to its international expansion, Wong told CNBC in November. Reddit’s fastest-growing regions in terms of users include the United Kingdom, the Philippines, India and Brazil, he said.
“That points to a lot of our future user growth opportunities definitely outside of the U.S. and local language,” Wong said. “Every language is an opportunity for another Reddit.”
The company also remains one of the top five most searched websites, Raymond James analysts said, citing research firm SimilarWeb. Reddit’s “authentic and exceptionally moderated content (community system)” will help the company stay at the top of search results, ultimately resulting in more Reddit users creating accounts, the analysts wrote.
Reddit makes more money from logged-in users who have accounts than from logged-out users, who have been visiting the platform more frequently over the past year due to internal site improvements and a previous change to the site. Google search algorithm that favored “authentic” content.
Analysts at Raymond James noted in a “risks” section that Reddit could suffer from “unfavorable Google search algorithm updates” that drive the site lower in search results and slower rates to convert disconnected users into their more financially lucrative registered counterparts.
Look: Steven Mnuchin on TikTok: We would be very interested in investing in the business
