Reddit stock regained some ground Monday after a steep slide last week that tacked on to a more than 50% drawdown from highs earlier this year for the social media stock. Social media giant Meta Platforms also pushed higher while rivals Snap and Pinterest were lower.
Reddit was initiated with a buy call by analysts at Truist on Monday. Analyst Youssef Squali set a 150 price target for Reddit stock, saying the forum website is "one of
the fastest growing social media platforms and one that's gaining share of the digital ad market."
Reddit's vast range of specific "subreddit" groups create "effective marketing, commerce, and licensing opportunities," Squali wrote. "We expect Reddit to continue generating margin-rich licensing revenue from its valuable corpus of data. We expect additional partners to be signed up over time following Google and OpenAI last year."
While Reddit soared to a 250% gain from its March 2024 IPO through the end of last year, the stock has slumped significantly this year. Shares are off nearly 60% from a high of 230.41 in early February. The stock began slumping after reporting slower-than-expected Q4 user growth in February.
But the slide has extended as investors backed away from riskier stocks. Reddit fell 11% on Thursday and another 10% Friday as investors reacted to President Donald Trump's plan to place tariffs on most imported goods. Some analysts expect that advertisers will lower spending in response to economic uncertainty.
But given Reddit's recent slump, Squali wrote that he believes "shares have been de-risked relative to where expectations were when the stock was at 225."
Reddit Stock, Meta Stabilize After Steep Drops
Reddit stock is up more than 5% at 91.36 on the stock market today. Reddit is still down 12% so far in April after a 35% drop in March. Shares fell below Reddit's 50-day moving average late last month and remain under the long-term support level.
Investors are still working to make sense of what Trump's tariff plans will mean for digital advertising and social media. Shares of Facebook parent Meta have fallen 10% this month but are ahead 2.5% in recent action Monday.
First quarter earnings season will be closely watched, with Meta, Reddit and others expected to provide results later this month or in early May. Analysts with Wedbush wrote Monday that they expect many tech firms will decline to give guidance for the current quarter amid the tariff uncertainty.
Meanwhile, Raymond James analyst Josh Beck wrote Monday that checks with advertising agencies done before the tariffs announcement showed a strong January for the digital ad market before a decline in returns on ad spending in mid-February. The first quarter looked "OK" though with "weaker footing entering the second quarter," Beck wrote.
In a separate note, Beck downgraded his view on Pinterest to market perform, or neutral, from an outperform call. He cited the company's exposure to advertising from consumer-packaged goods companies. Tariffs uncertainty could weigh on "discretionary/brand spend, particularly in categories like beauty, home, (food and beverage) and apparel where Pinterest over-indexes," Beck wrote.
Pinterest stock was down 2.5% at 25.17 in recent action Monday. Snapchat parent Snap, meanwhile, fell 2.8% to 7.74.
