Needham Reaffirms Buy on Reddit, Sees Upside Despite 40% Pullback

Reddit (NYSE:RDDT) received a reaffirmed Buy rating and $220 price target from Needham analysts, even as the stock has fallen around 40% since its February 12 earnings report.

In a recent update, Needham shared a detailed look at shifting investor sentiment throughout Q1 2025, comparing it to previous quarters. The analysts noted a clear evolution in investor concerns and optimism, with little repetition of issues between quarters, signaling a fast-changing perception of the company.

Despite the stock’s sharp decline, Needham increased its profitability forecasts for both 2025 and 2026, based on updated modeling. Reddit's revenue growth outlook remains intact, with the firm continuing to project 30% year-over-year growth in both years—the fastest among the companies Needham tracks.

The note also includes a deep dive into bull vs. bear narratives from past quarters, highlighting how investor debates have shifted over time. While Reddit faces ongoing scrutiny amid its post-IPO performance, Needham sees the stock’s current levels as offering a compelling entry point, given the platform’s strong growth potential and improving financial trajectory.