Reddit shares rise 7% to record high as Raymond James raises price target

Reddit shares rose more than 7% to a record high on Tuesday after analysts at Raymond James raised their price target and reiterated their “strong buy” rating for the social media platform.

During midday trading, the company’s shares reached $191, surpassing the previous high of $182 on January 6. Reddit shares topped $100 for the first time in late October following the company’s announcement financial results of the third quarter which beat Wall Street expectations.

Analysts at Raymond James said in a note on Tuesday that they would raise their price target on Reddit from $150 to $200, mainly because of their “belief” that Reddit can expand its business internationally.

The company plans to attract more users outside its core U.S. market as it looks to expand its advertising business, Reddit Chief Operating Officer Jen Wong told CNBC in November. Reddit’s Q3 sales are overwhelming online advertisinggrew 68% year-over-year to $348.4 million.

Reddit’s greater use of artificial intelligence to automatically translate its site’s text into languages ​​such as Portuguese, French, Spanish, Filipino and German “should help improve Reddit’s local search rankings and ensure continued hypergrowth,” analysts at Raymond James wrote.

The company’s AI translation efforts are key to its international expansion, Wong told CNBC in November. Reddit’s fastest-growing regions in terms of users include the U.K., the Philippines, India and Brazil, she said.

“This points to a lot of our future user growth opportunities, certainly outside of the US and local language,” Wong said. “Every language is an opportunity for a different Reddit.”

The company also continues to be among the top five most popular websites, Raymond James analysts said, citing research firm SimilarWeb. Reddit’s “authentic and uniquely moderated content (community system)” will help the company stay at the top of search results, ultimately driving more Reddit users to create accounts, the analysts wrote.

Reddit is making more money from registered users who have accounts, rather than those who have logged out, who have visited the platform more frequently over the past year thanks to internal improvements to the site and a previous change to Google’s search algorithm that favored “authentic” content.

Analysts at Raymond James noted in the “risks” section that Reddit could suffer from “adverse updates to Google’s algorithm search” that push site below in the search results and lower conversion rates of those logged out users into more financially profitable logged-in counterparts.

Look: Steven Mnuchin on TikTok: We would be very interested in investing in the business