Evercore ISI has maintained an Outperform rating and a $320.00 price target on Reddit (NYSE: RDDT) following a webinar with Jonny Waite, CEO of RECHO, a marketing agency focused on Reddit. The $320 target stands well above Reddit's current trading level of $190.05, reflecting an expected premium based on the firm's assessment of the company's growth trajectory.
Advertising momentum and growth expectations
In its post-webinar research note, Evercore ISI said marketers are increasingly turning to Reddit for incremental reach and high attention metrics, with the platform proving effective at driving assisted conversions. The firm observed that advertising budgets allocated to Reddit generally come from other social platforms - specifically secondary social networks such as X, Snap and Pinterest - rather than being diverted from dominant search and social players like Google and Meta. This budget source pattern underpins part of Evercore's constructive view.
Evercore cited data showing analysts expect Reddit's sales to grow by 65% this year, aligning with the substantial gap between the current share price and the $320 target. The research note also pointed to Reddit's reported margins and recent revenue performance: a gross profit margin of 91.21% and revenue growth of 69.71% over the trailing twelve months, figures highlighted from InvestingPro data.
Where Reddit advertising performs best
The firm identified category strengths for Reddit advertising, noting top performance in B2B areas where purchase intent tends to be high. Consumer packaged goods (CPG) brands that tie products to active hobbyist communities, as well as travel and hospitality advertisers, also see meaningful returns. Evercore emphasized that success in e-commerce on Reddit is more variable and closely tied to how well individual products match the interests of specific subreddits.
Infrastructure limits and measurement gaps
Despite highlighting strong advertiser interest, Evercore ISI underscored that Reddit's less mature advertising infrastructure remains its primary bottleneck for scaling ad spend. The firm pointed to limitations across measurement, targeting, creative tools and automation when compared with more established ad platforms. A notable operational constraint is that a significant number of advertisers have not fully implemented Reddit's pixel and conversion API, which restricts optimization and measurement capabilities.
Additional challenges noted include rising cost-per-click (CPC) rates - with costs increasing from under $5 to $7-$9 in certain categories as competition for placements intensifies - and volatility in large language model (LLM) citation rates, though Evercore observed that Reddit continues to serve as an important discovery surface for users even amid citation fluctuations.
Financial footing and analyst projections
Evercore highlighted Reddit's strong liquidity position, reporting a current ratio of 12.13 that indicates liquid assets materially exceed short-term obligations. InvestingPro assigns Reddit an overall financial health score of "GREAT" and offers 18 additional insights plus a comprehensive Pro Research Report detailing the company's financial position.
In its coverage initiation, Evercore characterized Reddit as having a robust growth profile, forecasting compound annual growth rates for revenue and EBITDA in ranges of 30%-40% and 40%-50%, respectively. Those projected growth rates formed part of the rationale for the $320 target.
Other analyst and product developments
Recent analyst activity includes a Buy rating from Guggenheim with a $245 price target, a view supported by the firm's citation of product investments designed to improve user experience - including an improved onboarding flow and updated search user interface. Cantor Fitzgerald initiated coverage with a Neutral rating and a $240 target, noting Reddit's more than 120 million daily active users.
On the product front, Reddit has begun testing verified profiles that add a grey checkmark next to usernames to help users identify verified individuals and businesses. The feature is intended to improve transparency in situations where distinguishing verified accounts is useful, such as during brand announcements.
Outlook and watch items
Evercore's reassessment reiterates the stock's upside relative to its current trading price while also flagging precise operational areas that must be improved for advertisers to meaningfully increase spend. Key items to monitor include the evolution of CPCs, the pace at which advertisers adopt Reddit's tracking tools, enhancements to creative and automation capabilities, and how citation dynamics from large language models affect discovery on the platform.
Summary
Evercore ISI reaffirmed an Outperform rating and $320 price target on Reddit after a webinar with RECHO CEO Jonny Waite, citing growing advertiser interest, high gross margins and strong revenue growth. The firm cautioned that constraints in advertising infrastructure - including measurement and automation gaps - limit the platform's ability to scale ad spend, even as categories like B2B, hobby-linked CPG and travel show strength.