95% Upside for Reddit? B. Riley Thinks So, and Here’s How
Reddit's stock fell 25% after its Q3 report, with revenue up 53% but daily U.S. users down 2%. B. Riley cut its price target to $190 (95% upside) but maintained a Buy rating, citing earnings and a lower multiple. Analysts' consensus target is $213, with concerns over user growth and guidance.
How this was made
The 30-second read
Why it matters
The earnings miss and user slowdown prompted B. Riley to lower its price target, reinforcing a bearish outlook.
Market read
Reddit's earnings and user metrics drive immediate price action; analyst downgrade amplifies downside risk.
What to watch
Potential upside from new community features or monetization initiatives not yet reflected in guidance.
Background
Reddit reported Q3 revenue of $895 million, a modest beat, but highlighted a 2% decline in daily active users and weaker search referral traffic.
Ticker impact
B. Riley cut Reddit's price target to $190 after the Q3 earnings report, noting a 25% share drop and declining user metrics.
likely pressure as the market prices in the lower target and user decline
Analyst downgrade combined with a 25% price drop and lower guidance creates a clear bearish catalyst.
Market effects
Social media sector may face broader scrutiny as user growth slows, potentially affecting peers.
U.S. tech stocks could see modest pullback in the near term.
Limited to U.S. equity markets; no immediate global macro impact.
Counterpoint
If Reddit can stabilize user growth, the lower target may be overly pessimistic, offering a buying opportunity.
Key entities
- CompanyReddit
Social media platform listed on NYSE under ticker RDDT.
- Research FirmB. Riley
Analyst firm that issued the price target cut.
