Core Viewpoint - Reddit's stock experienced a significant decline of over 9% following an analyst's price-target cut, which is notably larger than the S&P 500's 1.6% drop [1] Group 1: Analyst's Assessment - Baird's analyst Colin Sebastian reduced Reddit's fair-value assessment from $140 to $120 per share, maintaining a "neutral" recommendation despite the adjustment [2] - The price-target cut was influenced by concerns regarding the impact of artificial intelligence (AI) on Reddit's user growth, particularly with advancements from tech companies like Alphabet [4] Group 2: Impact of AI on Reddit - The introduction of AI responses by Google's core unit poses a potential threat to Reddit's user engagement, as users may rely on AI for answers instead of engaging in discussions on the platform [5] - Despite these concerns, the analyst believes that AI cannot yet replicate genuine human interactions, suggesting that Reddit's forum-style format will continue to attract users [6] Group 3: Growth Potential - Reddit is expected to continue attracting new users, which could support double-digit percentage growth in key financial metrics such as revenue and profitability [7]
Why Reddit Stock Got Hammered on Wednesday