Reddit stock is picking up where it left off after a strong 2024. Shares of the social media company rose 7% Friday after gaining 1.5% Thursday.
Reddit stock jumped from its 21-day moving average Friday in a strong overall day for tech stocks. Industry peers Meta Platforms, Pinterest and Snap also were higher.
The 19-year-old Reddit went public in March, and has gained nearly 260% since then. Reddit accelerated its user growth last year and also posted a profit for its September quarter, ahead of expectations.
Investors are still sizing up what 2025 will bring for Reddit and other social media stocks that rely on digital advertising for revenue. In a client note previewing 2025, Piper Sandler analyst Thomas Champion was positive overall on the state of the digital ad market.
"We expect solid growth in 2025, but with potential 'air pockets' due to Easter timing, Olympics, and political (spending)," Champion wrote to clients late Thursday. "Ad spend growth may slow in 1Q25 and relatedly a 'Trump bump' may have boosted ad spend in late 2024."
For Reddit, Champion added, a major 2025 "theme" will be the company's efforts to make its massive trove of user forums more easily searchable. Google often serves as a gateway for users seeking specific information from Reddit. But the company has announced upcoming AI-powered features aimed at improving search options on Reddit.
"2025 could be the year for Reddit to improve its search functionality, enhancing the user experience and driving growth," Champion wrote. "Better search may keep daily active user (DAU) growth higher for longer and improve engagement."
Reddit Stock On IBD 50 List
Reddit's reliance on Google for traffic is one risk factor analysts are watching. Still, Wall Street is overall positive on the company as it approaches its one year IPO anniversary. Reddit has 14 buy ratings from Wall Street analysts, according to FactSet. That's compared against 7 hold or neutral calls and one sell call.
Champion, at Piper Sandler, holds a positive overweight rating for Reddit stock.
On the stock market today, Reddit gained 7% to close at 177.68. Shares hit an intraday high of 181.22, just below a record high of 182.20 Reddit stock reached on Dec. 26 before a slight pullback to close the year.
Reddit's technical and fundamental ratings remain strong. The stock has best possible IBD Relative Strength Rating of 99.
Reddit's IBD Composite Rating is 93 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, the company's strong performance has landed Reddit stock on the premier IBD 50 list, as well as IBD's IPO Leaders and Tech Leaders lists.
