Reddit Inc (NYSE: RDDT) has lost nearly 35% in about three weeks but a Morgan Stanley analyst recommends not counting on a swift recovery.

The investment firm assumed coverage of the social media platform today with a “neutral” rating and $45 price target that suggests a near 5.0% upside only.

Analysts at Morgan Stanley did acknowledge potential for ads growth but cited valuation concerns for their somewhat dovish view on the Reddit stock.

The news arrives only weeks after Cathie Wood – the founder and chief executive of Ark Invest revealed a position worth just over $500 million in $RDDT (find out more).

Revenue growth topped cost at Reddit Inc by about three times last year. The New York listed firm was profitable as well in the back half of 2023.

Plus, there’s an artificial intelligence angle to its story as well. Still, Morgan Stanley is not the only firm that has recently opted to remain cautious on $RDDT.  

Doug Anmuth – a JPMorgan analyst also initiated Reddit stock at “neutral” this month. Its “base of 73 million users is relatively sub-scale” he told clients in a recent research note.

Both $JPM and $MS were underwriters for the initial public offering of Reddit in March. They, therefore, had to wait for about a month before initiating coverage of the forum social network.

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