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Reddit Stock Dominated 2024—Why the Rally Isn't Over Yet
RDDTReddit(RDDT) MarketBeat·2024-12-27 12:16

Core Viewpoint - The stock market trends for 2024 indicate that social media stocks, particularly Reddit, are gaining attention due to their strong performance and potential for future growth driven by user engagement and monetization strategies [1][10]. Company Performance - Reddit's revenue for the latest quarter reached 348.4million,markinga68348.4 million, marking a 68% increase year-over-year, with a gross margin of 90.1% [3][4]. - Daily active users grew to 97.2 million, a 47% increase over the past year, while average revenue per user rose to 3.58, up 14% [5][10]. - Free cash flow improved significantly to 71.6million,indicatingapositiveshiftfromlastyear′snetcashoutflow[12].MonetizationStrategies−Reddithasimplementednewmonetizationmeasures,includingagreementswithmajorcompanieslikeMetaandGoogletoleverageuserdataforAImodeltraining[13][15].−Thegrowthinuserengagementisexpectedtoenhancedataavailabilityformonetization,creatingfurtherrevenueopportunities[16].AnalystRatingsandForecasts−AnalystsfromCitigroupandGuggenheimhaveissueda"Buy"ratingforReddit,withpricetargetsof71.6 million, indicating a positive shift from last year's net cash outflow [12]. Monetization Strategies - Reddit has implemented new monetization measures, including agreements with major companies like Meta and Google to leverage user data for AI model training [13][15]. - The growth in user engagement is expected to enhance data availability for monetization, creating further revenue opportunities [16]. Analyst Ratings and Forecasts - Analysts from Citigroup and Guggenheim have issued a "Buy" rating for Reddit, with price targets of 200 and 210respectively,suggestingpotentialupsideof18.6210 respectively, suggesting potential upside of 18.6% to 24.5% from current trading levels [7][17]. - The stock currently holds a "Moderate Buy" rating based on 21 analyst ratings, with a 12-month price forecast averaging 132.70 [14]. Institutional Investment - Institutional investors, particularly FMR LLC, increased their holdings in Reddit by 302.8% as of November 2024, raising their net position to $801.4 million, representing 6.9% ownership in the company [8].