Zinger Key Points
- Reddit shares rise after Google annouces expanding its partnership to better integrate Reddit content across its products.
- Redburn Atlantic initiates Reddit with a Sell rating, citing risks from dependence on Google Search traffic.
- Join Nic Chahine live on Wednesday, March 19, at 6 PM ET for a step-by-step breakdown of how to to capitalize on post-Fed volatility and manage risk in this fast-moving market. Register for this free strategy session today.
Reddit Inc. RDDT shares traded briefly higher on Monday after Google announced an expanded partnership with the social media platform.
What To Know: According to Reuters, the agreement will integrate Reddit content more effectively across Google’s products, signaling a closer relationship between the two companies amid concerns that Reddit’s user growth is heavily reliant on Google Search traffic.
Despite the stock’s modest gain, Redburn Atlantic analyst James Cordwell initiated coverage on Reddit with a Sell rating, citing vulnerabilities in its daily active user growth due to potential algorithm shifts by Google.
Cordwell set a price target of $75, significantly below the current trading price, potentially raising concerns about the long-term sustainability of Reddit’s traffic-driven business model.
The conflicting signals between Google’s deeper involvement and analyst skepticism highlight the uncertainty surrounding Reddit's growth trajectory. While the company benefits from increased visibility on Google’s platforms, reliance on search algorithms remains a risk.
RDDT Price Action: Reddit shares closed down 2.07% at $125.56 at publication Monday, according to Benzinga Pro.
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