What Happened?
Shares of online community and discussion platform Reddit (NYSE: RDDT) jumped 5.1% in the afternoon session after investment firm Raymond James raised its price target on the stock to $250 from $225, maintaining a 'Strong Buy' rating. The firm pointed to a stronger outlook for Reddit's advertising revenue, stating it was more bullish on the Average Revenue Per User (ARPU) opportunity following recent ad checks. Raymond James's positive view was supported by the potential for moderate increases in ad load, better ad pricing, and benefits from the company's AI-powered search feature. The firm projected that the AI search tool alone could create a $350 million revenue opportunity by increasing user queries. This optimism was built on Reddit's solid financial health, which included a 91.04% gross profit margin and 70% year-over-year revenue growth.
The shares closed the day at $202.43, up 3.8% from previous close.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 64 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock dropped 4.7% on the news that President Trump threatened to impose "massive" new tariffs on Chinese imports, reigniting trade war fears. The unexpected announcement shattered a monthslong calm on Wall Street, sending major indices tumbling. The S&P 500 dropped around 1.3%, while the tech-rich Nasdaq Composite fell 1.7%. Investors reacted by selling off stocks, particularly in the technology and retail sectors, amid concerns that escalating trade tensions could disrupt global supply chains and increase costs for companies. The sell-off marked a significant reversal from the morning's slight gains, highlighting the market's sensitivity to geopolitical trade developments.
Reddit is up 22.5% since the beginning of the year, but at $203.20 per share, it is still trading 24.9% below its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $4,029.
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