Reddit Shares rose over 7% to a record high on Tuesday after analysts at Raymond James raised their price goal and reiterated their “strong buy” rating on the social media platform.
The company's shares hit $191 during midday trading, surpassing its previous high of $182 set on Jan. 6. Reddit shares topped $100 for the primary time in late October after the corporate reported third-quarter financial results that beat Wall Street expectations.
Raymond James analysts said in a note Tuesday that they might raise their Reddit price goal to $200 from $150, largely as a result of their “belief” that Reddit can expand its business internationally.
The company plans to amass more users outside of its core US market to expand its promoting business, Jen Wong, Reddit's chief operating officer, told CNBC in November. Reddit's revenue, which is generally internet marketing, rose 68% 12 months over 12 months to $348.4 million.
Reddit's increasing use of artificial intelligence to routinely translate the positioning's text into various languages reminiscent of Portuguese, French, Spanish, Filipino and German “should help improve local search rankings for Reddit and ensure sustained hypergrowth,” they wrote Raymond James analysts.
The company's AI translation efforts are key to its international expansion, Wong told CNBC in November. Reddit's fastest-growing regions when it comes to users include the United Kingdom, the Philippines, India and Brazil, she said.
“This suggests that many of our future opportunities for user growth definitely lie outside of the U.S. and local language,” Wong said. “Every language is an opportunity for a different Reddit.”
The company stays among the many top five most searched web sites, Raymond James analysts said, citing research firm SimilarWeb. Reddit's “authentic and uniquely moderated (community system) content” will help the corporate stay at the highest of search results, which is able to ultimately result in more Reddit users creating accounts, the analysts write.
Reddit makes more cash from logged-in users who’ve an account than from logged-out users, who visited the platform more incessantly previously 12 months as a result of internal site improvements and an earlier change to Google's search algorithm that favored “authentic” content.
Raymond James analysts noted in a “Risks” section that Reddit could suffer from “unfavorable updates to Google search algorithms” that push the positioning lower in search results and slow the conversion of those logged-out users into more financially lucrative logged-in users counterparts.
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