Oppenheimer began coverage of Reddit (RDDT, Financials) on Wednesday with an Outperform rating and a $125 price target, pointing to strong advertiser demand and resilient revenue growth even after a steep drop in shares earlier this year.

Reddit's stock has fallen 49% since February 19, far worse than the NASDAQ Composite Index's 16% decline over the same period. Oppenheimer said the current price reflects concerns about Reddit's reliance on Google (GOOGL, Financials) for traffic, weaker international user engagement, challenges in monetization, and a tough comparison for second-quarter daily active users.

Still, Reddit's 2024 average revenue per user rose 13% from a year earlier as daily active users jumped 43%, showing that advertiser demand remained strong despite rising inventory. Oppenheimer said Reddit's partnership with Google could be an advantage as Google faces mounting competition in consumer artificial intelligence. A survey of 690 U.S. users showed gains in Reddit's user engagement and ad relevance.

The $125 target values Reddit at 28 times expected 2026 EBITDA, a 63% premium to its peers. Oppenheimer expects Reddit's EBITDA to grow 168% between 2024 and 2027.

Meanwhile, Snap (SNAP, Financials) continues to face mixed views. JMP Securities kept a Market Outperform rating with a $14 price target, while TD Cowen cut its target to $10 and maintained a Hold rating.

Broader pressure is also hitting the sector. Guggenheim pointed to slower growth in Snap's audience and downloads, while Evercore ISI downgraded the stock to its Tactical Underperform list, warning of greater recession risks. RBC Capital Markets flagged rising tariff concerns for companies like Meta (META, Financials), Alphabet and Amazon (AMZN, Financials), with Meta the most exposed.