Reddit Inc (RDDT) Stock Forecast & Price Target

Reddit reported impressive growth metrics in its 4Q24 results, with Daily Active Users (DAUs) reaching 101.7 million, reflecting a 39% year-over-year increase, alongside significant international growth of 46%. The company's revenue surged to $428 million, marking a 71% year-over-year increase, driven by a robust 60% rise in advertising revenues and a notable 4x increase in data licensing revenues. Furthermore, Reddit achieved a gross margin of 92.6%, a 410 basis point improvement, indicating strong operational efficiencies and potential for continued profitability.

Reddit's stock outlook is negatively impacted by several fundamental factors, including a decline in daily active users (DAUs) in the most recent quarter and dependency on Google, which may affect its advertising revenue due to a recent algorithm change. Additionally, there are concerns surrounding slowing user growth, a decrease in average revenue per user (ARPU), and the potential ramifications of regulatory restrictions on data licensing. The company's international expansion efforts may also increase operational costs, further straining profitability amidst an already challenging advertising environment.