Analyst Reboots Price Target on Reddit Shares Ahead of Earnings

If you all want to live beneath the waves in your yellow submarine, you’re going to need a crew.

And there’s Reddit (RDDT) can help you

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The social media company is teaming up with the US Navy on a recruiting campaign aimed at Gen Z.

The Navy has released a Reddit-level role-playing game that requires players to crack codes and search for clues to complete command directives, according to Forbes.

The aim of the ‘Sub Hunter’ campaign, which will run until the end of this month, is to help the service attract the next generation of divers.

The Hunt subreddit is looking for those with a “puzzle bent,” where participants must complete multiple “directives” to complete the game. The US Navy has been advertising on Reddit since 2018.

“To ensure we attract the best and brightest future Sailors, including submariners, the Navy is constantly looking for innovative ways to engage with potential candidates on … social and digital platforms,” ​​said Rear Admiral James P. Waters, commander of the Navy Recruiting Command.

Reddit has quickly become a favorite platform for millions of people every month.

SOPA Images/Getty Images

Reddit CEO Rides Wave of ‘Momentum’

Many people may know Reddit from the stock meme craze of 2021, when a group of retail investors teamed up on the “wallstreetbets” forum to buy shares of heavily shorted companies like GameStop. (GME) hoping to force short sellers to buy shares to cover their bearish positions.

Keith Gill, aka Roaring Kitty, sparked the meme stock craze during the lockdown days of the pandemic, and the story became the subject of the 2023 film “Dumb Money.”

Related: Analysts Revise Price Target on Reddit Shares After Earnings

Yubo Kuo, an assistant professor in Penn State’s College of Information Sciences, told WallStreetBets in a June interview: “Investing is moving beyond the individual level and becoming a social scene where people form a community to invest together.”

“Younger generations generally face a much tougher financial situation,” he said. “Research suggests that when people are experiencing financial difficulties or are stressed in general, they tend to engage in high-risk trading behavior. That’s what we see in WallStreetBets.”

Reddit went public in March, and the San Francisco-based company held its first earnings call as a public company in May. Shares are up nearly 47% year to date.

The company released second-quarter results on Aug. 6, reporting a loss of 6 cents per share, compared with an expected loss of 32 cents. Revenue rose 54% to $281.2 million, beating expectations of $254 million.

“We kept pace with both strong business performance and product progress,” co-founder and CEO Steven Huffman told analysts during the company’s earnings call.

“In Q2, both users and revenue grew over 50% year over year. And for the second quarter in a row, we were cash flow positive and profitable on an adjusted EBITDA basis,” he added .

User growth continued to grow, Huffman said, reaching new highs with more than 342 million weekly active users and more than 91,000,000 daily active users.

“More and more people are coming to Reddit to explore their interests, engage in conversations and find their communities,” he said.

Related: The veteran trader who correctly predicted Palantir’s rally reveals a new price target

International expansion remains a top priority and one of the company’s biggest opportunities, Huffman said.

“Fifty percent of our current user base is outside the US, and we believe we can scale this significantly over time,” he noted.

International daily active users topped 450 million, up 44% year-over-year and up 11% from the first quarter, in countries of interest such as France, India, the UK and the Philippines, “where we’re seeing good results with strategies our growth, including through automatic translation”.

Huffman said immersive machine translation, a form of artificial intelligence that translates text from one language to another without human involvement, is now widely available in French and, “as a result, France has been one of our countries with the faster growth, outpacing growth in the US. .”

“We will now begin expanding machine translation into German, Spanish, and Portuguese, with the goal of making Reddit accessible to everyone, regardless of their native language period.”

The analyst raised his price target on Reddit shares

The social media company is scheduled to report third-quarter results on October 29.

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JPMorgan raised its price target on the company on Reddit to $77 from $59 on Oct. 7, while maintaining a neutral rating on the stock, according to The Fly.

The firm updated Reddit’s estimates ahead of third-quarter results to reflect recent positive trends.

The company’s tone was upbeat in the third quarter, and with the expiration of the stock lock-up behind it, likely ahead of estimates, and the potential for big new language data licensing deals, Reddit has become a much more frequent topic of discussion with investors. the firm said in a research note.

However, JPMorgan said it believes the share price reflects this recent enthusiasm.

Last month, B. Riley initiated coverage on Reddit with a Buy rating and a $75 price target.

The company offers “abundant monetization opportunities” as it offers a differentiated value proposition to users, advertisers and content licensees through its “unique” platform that powers tens of millions of users in more than 100,000 communities, while creating a large and growing repository of curated content. , the firm said.

Reddit is in the relatively early stages of monetizing the platform through advertising and data licensing and is positioned for healthy top-line growth and margin gains in the coming years, B. Riley said.

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