Reddit started bullishly at Argus as growth momentum impresses

[Reddit: Online Communities, News Aggregation, And Content Rating]
Mario Tama/Getty Images News

Analysts at Argus began coverage of social media platform Reddit (NYSE:RDDT [https://seekingalpha.com/symbol/RDDT]) with an investment rating of "buy" on Monday, citing its impressive growth since going public last year and its recent positive second-quarter results.

The research firm believes the company's growth runway is promising, which justifies the share premium at least in the near term and during a bull market.

"From a technical perspective, the shares have been in a bullish pattern of mostly higher highs and higher lows since the March market and technology sector selloff," Argus said in its note.

The research firm said Reddit's aggressive investment spending on R&D is expected to grow average daily users on the company's platforms and will help in capturing share in a large and fragmented advertising market.

They noted that the company has a clean balance sheet, and its competitive advantages include its broad platform, its large base of dedicated users, and its history of product innovation.

Argus also pointed out that the company is exposed to risk and faces fierce competition from deep-pocketed rivals, including Meta Platforms (META [https://seekingalpha.com/symbol/META]), Alphabet (GOOG [https://seekingalpha.com/symbol/GOOG]) (GOOGL [https://seekingalpha.com/symbol/GOOGL]), and Amazon (AMZN [https://seekingalpha.com/symbol/AMZN]), for ad dollars. In Q2, advertising revenue accounted for 93% of the total revenue.

RDDT has a price target of $250, implying an upside of nearly 3%.

MORE ON REDDIT

* Reddit: The Bull Case Is Stronger Than Ever [https://seekingalpha.com/article/4808319-reddit-the-bull-case-is-stronger-than-ever]
* Reddit: Strong Q2 And Tremendous Potential But Buy On Dips [https://seekingalpha.com/article/4808284-reddit-strong-q2-and-tremendous-potential-but-buy-on-dips]
* Reddit: The Future Of Consumer-Led Marketing [https://seekingalpha.com/article/4808102-reddit-future-of-consumer-led-marketing]
* Reddit signals 55% Q3 revenue growth outlook as user engagement and ad innovations accelerate [https://seekingalpha.com/news/4476195-reddit-signals-55-percent-q3-revenue-growth-outlook-as-user-engagement-and-ad-innovations]
* Reddit's results topper, robust forecast drive shares higher [https://seekingalpha.com/news/4475933-reddits-results-topper-robust-forecast-drive-shares-higher]