RBC Capital Starts Coverage of Reddit (RDDT) With Sector Perform Rating

On Monday, June 2, RBC Capital initiated coverage of Reddit, Inc. (NYSE:RDDT), assigning a “Sector Perform” rating and a $125 price target. The firm showed cautious optimism about the company’s ability to grow its revenue significantly.

RBC Capital analysts noted that the internet is shifting towards a more consolidated user engagement landscape, driven by LLM-based generative AI tools. This change is still in its early stages. According to the analysts, Reddit, Inc.’s (NYSE:RDDT) exposure to this shift could be mixed. However, the company is well-positioned to benefit from increased user activity and advertising revenue as this shift progresses.

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The analysts also raised concerns about Reddit, Inc.’s (NYSE:RDDT) reliance on potentially unstable traffic sources. The firm’s analysts believe that growth in US logged-in users is a key factor that can either boost or limit RDDT’s value. Overall, RBC Capital sees Reddit, Inc. (NYSE:RDDT) as having a balanced risk and reward profile at current levels.

Reddit, Inc. (NYSE:RDDT) operates as a social media platform that allows registered users to submit content to the site, which is one of the most visited websites in the world.

While we acknowledge the potential of RDDT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than RDDT and that has a 100x upside potential, check out our report about the cheapest AI stock.

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Disclosure: None.