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Reddit stock price forecast: New Street sees 20% downside

By: Invezz
reddit stock price forecast new street sees 20% downside

Reddit Inc (NYSE: RDDT) is a fairly risky investment now that its trading at double the price at which it IPO-ed, as per a New Street Research analyst.

Reddit stock could tank to $54

Dan Salmon assumed coverage of $RDDT this morning with a “neutral” rating. His $54 price objective suggests about a 20% downside from here.

The analyst is dovish on Reddit stock primarily because he expects “volatility through the release of second quarter earnings and three days after when the lockup expires”.

Salmon’s view is in contrast with Cathie Wood – the founder and chief executive of Ark Invest who recently parked $500 million in the social media company (read more) even though it remained in $91 million loss in 2023.

Sam Altman of OpenAI is also a notable shareholders of Reddit Inc.

Cramer shares view on Reddit shares

Dan Salmon agreed that a potential data-licensing deal with OpenAI could unlock more upside but said “the challenge is sizing the opportunity, gauging progress, and gaining conviction in long-term viability”.

For now, he’s convinced that the potential agreement is already factored into the Reddit stock price.

The New Street Research analyst also talked of the need for $RDDT to broaden its advertisers base in his note to clients on Tuesday. The forum social network brought in about 26% of its revenue in 2023 from its top 10 advertisers only.

On Tuesday, famed investor Jim Cramer attributed the continued rally in Reddit shares to artificial intelligence.

Watch here:

The post Reddit stock price forecast: New Street sees 20% downside appeared first on Invezz

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