On Wednesday, Loop Capital adjusted its outlook on Reddit (NYSE: RDDT), reducing the stock's price target to $60 from the previous $65, while still recommending a Buy. The adjustment follows Reddit's impressive performance in its first quarter as a publicly-traded entity, where it surpassed expectations across all key metrics.
Reddit's user base increased by 37%, advertising revenue by 39%, and total revenue by 48%. The company also reported expanded profit margins and achieved Adjusted EBITDA positivity for the first time. Although the second-quarter revenue growth guidance of 35% represents a sequential decrease, it is 13% higher than the market consensus.
The company, despite being in operation for 18 years, only began efforts to monetize its platform a few years ago. Loop Capital suggests that Reddit still has considerable untapped potential for revenue growth. In light of these developments, the firm has raised its financial estimates for the social media company.
The revised stock price target reflects a slight tempering of expectations but maintains a positive outlook on Reddit's stock. Loop Capital's stance indicates confidence in the company's ability to continue its growth trajectory and capitalize on its monetization strategies moving forward.
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