Bernstein analysts started covering Reddit (NYSE:RDDT) with an Underperform rating and set a price target at $40. The analysts expressed concern over Reddit’s future beyond 2024, highlighting the challenges smaller social platforms face with ad targeting, measurement, and consumer purchasing intent.
Drawing comparisons with Pinterest and Snapchat, which have struggled despite having higher engagement, better ad tools, and more solid social graphs, the analysts questioned Reddit’s potential given its lower engagement levels, anonymous user base, and not-safe-for-work content. They suggest that balancing growing engagement with revenue growth often involves trade-offs, making the pursuit of profitability and scalability particularly challenging for Reddit.