Even a nod of approval from Wall Street isn’t helping Reddit stock. The shares fell lower Monday than even the most modest price targets set by investment advisers at big banks and wealth management firms.
Wall Street firms ranging from Deutsche Bank to Piper Sandler and Citizens JMP Securities gave Reddit buy ratings on Monday, anticipating the social media company’s share price will rise as high as $55. Meanwhile, JPMorgan Chase, Morgan Stanley, and Goldman Sachs gave the stock neutral ratings, setting their price targets from $40 to $47.
One of the more bullish analysts, Josh Beck of JMP Securities, said in a note to investors that his “strong buy” rating is because of Reddit’s opportunities for ad revenue growth, its AI deals, and its growing base of international users. Reddit announced a deal with Google in February, licensing content from Reddit users’ posts to train Google’s AI models. But the deal has since come under scrutiny from federal regulators, as the government begins to grapple with how AI companies obtain data to train their machine learning models.
Reddit stock fell Monday to just below $40 per share— the lowest price since it began trading March 22 — and well below an all time high of $74.90. It closed down 5.4% to $40.
Still, Reddit’s stock price is above its IPO price of $34, which is a good sign for the IPO market. Financial and academic experts have said that as long as Reddit stock avoids a massive sink, its successful debut could encourage other tech companies to go public.
In another positive sign for the IPO market, the even greater success of AI startup Astera Labs is continuing, with the stock trading at $72 on Monday, double the company’s IPO price.
Another nascent tech IPO, Colorado-based consumer rebate platform Ibotta, is expected later this week.