The user growth experienced by Reddit Inc. is a “gift” from Alphabet Inc.’s Google that may have led to excessive bullishness on the social-media company, according to analysts who have become the stock’s biggest bear.
Redburn Atlantic’s James Cordwell and Joseph Barker initiated coverage of Reddit with a sell recommendation, saying that while the financial performance since its initial public offering has been “stellar,” Wall Street is not appreciating the vulnerability of its growth to Google Search. Additionally, the analysts see user growth stalling in 2025.
“The reality, in our view, is that Reddit’s potential, breadth of appeal and thus value as a company are being overstated,” Cordwell and Barker wrote in a note published on Monday.
Shares fell 2% on Monday and is down 23% this year. It now has 15 buy-equivalent recommendations, seven holds and three sells among analysts tracking the stock, according to data compiled by Bloomberg. Cordwell and Barker’s price target of $75 is the lowest.
It’s so absurd, the website’s appeal lies entirely in the user driven experience created by volunteer moderators and user submitted content. Yet the path of profit growth for them lies in company placed ads, and LLM bots spamming comment sections to astroturf. The more they push for profit, the less appeal to users the site has.
Cordwell and Barker expect user growth for Reddit to stall in 2025 and, as a result, see revenue growth becoming more reliant on making the platform’s proposition more attractive for advertisers.
This won’t be even remotely fun for the people still using that platform. Because “making the platform’s proposition more attractive to advertisers” boils down to either more ads or ads that are more obnoxious, more disguised as content, more targetted.
I’m all for it if it convinces more people to leave. Unfortunately I see way too many people who see ads though and think “yup that’s just the way it is thank you more please”
Anybody being willing to view ads confuses me.
Oh no, who’s gonna buy ads on reddit when the rich white conservative bankrolling “He Gets Us” dies?
