Jefferies expects the company to deliver strong advertising revenue growth, based on conversations with ad industry executives.
- The company said in Q1 that it would bolster its advertising capabilities to turn human attention into a bigger revenue stream.
- Platforms losing share to Reddit were LinkedIn in business-to-business advertising, Pinterest, Snapchat, and X, according to the agencies who spoke to Jefferies, Investing.com reported.
- Analysts expect the company to generate $731 million in revenue and $1.45 per share in adjusted profit for Q2.
Reddit (RDDT) attracted significant investor attention on Friday after Jefferies issued positive commentary on the company following conversations with advertising agencies ahead of the social media platform’s second-quarter earnings, which are expected at the end of this month.
The firm expects Reddit to show strong momentum in the second quarter (Q2), according to a report from Investing.com, as the company has frequently been cited by ad firms for taking market share from social media budgets.
The company is scheduled to report earnings on July 30. Analysts expect the company to generate $731 million in revenue and $1.45 per share in adjusted profit, according to data from Koyfin.
Reddit Gaining Social Share Through Strong Contextual Targeting
The report said advertising agencies noted accelerated digital ad growth in Q2, with Reddit gaining social share through strong contextual targeting, high-intent audience, and incremental reach.
Platforms losing share to Reddit were LinkedIn in business-to-business advertising, Pinterest, Snapchat, and X, according to the agencies who spoke to Jefferies. Moreover, Reddit’s investments in automation tools benefited smaller advertisers and drove adoption among small and medium-sized businesses.
Jefferies maintained its ‘Buy’ rating on RDDT with a $250 price target, implying roughly 22% upside potential from the stock’s current level.
Reddit Executing On Advertising Strategy
The analyst commentary affirms that the company is executing on its ad strategy, the details of which it disclosed in its first quarter. At that time, the company said it would further bolster its advertising capabilities to turn human attention into a bigger revenue stream, after reporting 74% growth in ad revenue for Q1.
“We're executing this strategy across three areas: number one, scaling automation through our ads platform in Reddit Max; number two, delivering advertiser value across all objectives; number three, expanding the Reddit for Business ecosystem,” Chief Operating Officer Jennifer Wong said at the time.
On Stocktwits, retail sentiment toward RDDT remained in ‘bearish’ territory over the last 24 hours. RDDT stock has fallen roughly 15% so far this year but has gained over 37% over the last 12 months.
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