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Reddit Stock Plummets Despite Wall Street Optimism
Despite receiving positive feedback from Wall Street analysts, Reddit stock experienced a significant dip on Monday, falling below even the most conservative price targets set by major financial institutions and wealth management firms.
Conflicting Predictions from Wall Street
A variety of Wall Street firms, including Deutsche Bank, Piper Sandler, and Citizens JMP Securities, issued buy ratings for Reddit stock, with price targets reaching as high as $55. On the other hand, JPMorgan Chase, Morgan Stanley, and Goldman Sachs provided neutral ratings, establishing price targets ranging from $40 to $47.
Josh Beck of JMP Securities, one of the more optimistic analysts, justified his “strong buy” rating by highlighting Reddit’s potential for ad revenue growth, AI partnerships, and expanding international user base. Notably, Reddit recently entered into a partnership with Google to license user-generated content for AI model training, a move that has sparked regulatory scrutiny as authorities address data acquisition practices by AI companies.
Market Performance and IPO Outlook
Despite initially trading at a high of $74.90, Reddit stock plummeted to just under $40 per share on Monday, marking its lowest point since its market debut on March 22. Nevertheless, the stock remains above its IPO price of $34, indicating stability in the IPO market. Financial and academic experts suggest that Reddit’s ability to maintain a decent valuation post-IPO could encourage other technology firms to pursue public offerings.
In a contrasting scenario, AI startup Astera Labs experienced significant success, with its stock trading at $72, double its IPO price, showcasing a promising outlook for the market. Additionally, Colorado-based consumer rebate platform Ibotta is set to launch its IPO later this week, further contributing to the dynamic landscape of tech offerings.
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