What Happened?
Shares of online community and discussion platform Reddit (NYSE: RDDT) jumped 8.2% in the afternoon session after Jefferies raised its price target on the stock.
The investment firm boosted its price target to $300 from $230, maintaining a Buy rating. Jefferies cited the sustainability of Reddit's revenue growth, which has accelerated to multi-year highs, and noted that data licensing represents an "underappreciated call option" that could significantly increase earnings.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 63 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 3.5% on the news that the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs. Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
Reddit is up 56.2% since the beginning of the year, and at $259.18 per share, has set a new 52-week high. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $5,138.
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