Why Reddit Stock Inched Higher on Thursday

Reddit (NYSE: RDDT) shares recently reached an all-time high, propelled by Jefferies' reiteration of a 'buy' rating and an increased price target to $320 from $300. Jefferies' bullish outlook is based on Reddit's significant revenue potential, projecting 2027 revenue 35% above consensus and identifying substantial upside in U.S. average revenue per user (ARPU). This positive analyst sentiment is reinforced by Reddit's strong second-quarter performance, which saw revenue surge 78% year-over-year to $500 million and a net profit of $89 million, both exceeding analyst estimates.

Analysis

Reddit's (NYSE: RDDT) share price achieved a new all-time high, rising nearly 1%, directly following a bullish report from Jefferies. The analysts reiterated their buy recommendation and raised their price target to $320 per share from $300. The core of Jefferies' thesis is the significant untapped revenue potential, with their models projecting that Reddit's full-year 2027 revenue could surpass the current consensus estimate by 35%. A key driver for this outlook is the company's U.S. average revenue per user (ARPU), which stands well below that of its social media peers, suggesting substantial room for monetization growth. This optimistic forward-looking view is substantiated by Reddit's recent performance in its second quarter, where it reported a 78% year-over-year revenue increase to $500 million and a flip to a net profit of $89 million, both of which significantly exceeded average analyst estimates.

Key Decisions for Investors

• Investors should recognize the strong bullish momentum, supported by the Jefferies price target increase and a recent earnings report that beat estimates on both revenue and profit.
• The core investment thesis hinges on closing the monetization gap; therefore, tracking the growth of U.S. average revenue per user (ARPU) in upcoming earnings calls is critical to validating this outlook.
• Given that the analyst's revenue projection is for 2027, investors should weigh the long-term growth potential against the stock's current valuation at an all-time high.