By Angela Palumbo

Reddit stock was rising Monday after a Seaport Research analyst upgraded shares of the social networking company on confidence in its long-term opportunities.

Aaron Kessler upgraded shares of Reddit to Buy from Neutral and gave the stock a $165 price target on Monday, which implies a 45% increase from the stock's closing price of $113.83 on Friday.

"We continue to expect solid long-term user growth and meaningful revenue/monetization growth," Kessler wrote.

Kessler's upgrade comes after Reddit reported first-quarter financials after the stock market closed on May 1. Earnings and revenue both came in above Wall Street estimates, initially sending shares higher in after-hours trading. But the stock closed down 4.2% on Friday after management noted it was seeing signs of slowing daily active user growth in the second quarter as Google makes changes to its search functions.

"While near-term user growth is likely to decelerate, we remain positive on long-term user growth," Kessler said. "We believe increasing logged-in users as well as Reddit becoming a stronger brand over the last few years (6th most Googled search term) should continue to drive healthy long-term user growth in the U.S."

Other Wall Street analysts are also optimistic about Reddit's future. Of the 28 surveyed by FactSet, 18 say the stock is a Buy, nine say it's a Hold, and one recommends selling.

Truist Securities analyst Youssef Squali rates Reddit as a Buy with a $160 price target. He wrote on May 1 that, while external search changes are creating near-term headwinds for daily active user growth, "RDDT has several key initiatives, including Search & Answers, which should fuel user growth and engagement over time." Reddit Answers allows users to ask questions to an artificial-intelligence powered conversational interface.

Shares of Reddit rose 4.5% to $118.95 on Monday while the S&P 500 dropped 0.1%. The stock has fallen 27% this year.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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May 05, 2025 14:54 ET (18:54 GMT)

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