RDDT is soaring, analysts think it has further to go

Reddits AI search service Reddit Answers, improved monetization and a growing ad business were all mentioned as reasons analysts became more bullish

Reddit Inc. is on a path to long-term growth for a number of reasons, analysts say, and investors should buy in now.

The San Francisco-based company blew past Wall Streets revenue and earnings expectations and gave a better-than-expected outlook when it reported second-quarter results late Thursday.

That sent Reddits stock (RDDT) soaring 20.9% in morning trading on Friday. It was on course for its highest close since Feb. 14.

Truist Securities analyst Youssef Squali called Reddits results and guidance stellar and praised the improvement in how the company was able to make money on its services, like ads. He kept his rating on the stock at buy while raising his price target to $225 from $160, with the new target implying about 17% upside from current levels.

The bullish outlook reflects the strength [Reddit] is seeing across channels and campaign objectives, as well as a healthy digital ad market, he wrote.

Raymond Jamess Josh Beck is also now targeting $225 for the stock, but hes bullish for a different reason. He pointed to Reddits underappreciated Search AI.

Thats after CEO Steve Huffman said that Reddit is one of the few platforms positioned to become a true search destination, noting that the number of weekly users of Reddit Answers has soared sixfold since the previous quarter.

Beck said Reddit can benefit regardless of how search evolves, since users intentionally seek out the human perspectives present in Reddit conversations.

Guggenheim Securities analyst Michael Morris pointed to another reason hes more bullish after the results: Reddits broad-based advertising strength, which saw ad revenue rise 84% to $465 million.

The majority of growth came from greater penetration of existing client accounts, while the number of total active advertisers increased 50%, Morris wrote. We believe the company is in the early innings of assembling an ad sales force which we expect to drive sustained top line growth.

Of the 29 analysts surveyed by FactSet who cover Reddit, no fewer than 18 raised their stock-price targets following the results. There are currently 18 analysts who are bullish, while 10 are neutral and only one is bearish.

Reddit shares are up 15.4% in 2025, outpacing the SP 500 indexs SPX gain of 6.2%.