Even a nod of approval from Wall Street isn’t helping Reddit shares. Reddit stock fell lower than even the most modest price targets set by investment advisors at big banks and wealth management firms on Monday.
Wall Street firms ranging from Deutsche Bank to Piper Sandler and Citizens JMP Securities gave Reddit a buy rating April 15, anticipating the social media company’s share price will rise as high as $55. Meanwhile, JPMorgan, Morgan Stanley, and Goldman Sachs gave the stock a neutral rating, 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 its content from 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 shares fell to just below $40 — the lowest price since it began trading Mar. 22 — and well below an all time high of $74.90 the week following its IPO price. 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 told Quartz that as long as Reddit shares avoid a massive sink, Reddit’s successful debut will 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 shares 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.