Jim Cramer on Super Micro Computer and Other Stocks

5. Reddit, Inc. (NYSE:RDDT)

Number of Hedge Fund Holders: 39

During the lightning round, a caller asked Cramer if Reddit, Inc.’s (NYSE:RDDT) stock was still in play and this was his response:

“I like Reddit very much. Steve Huffman’s going to put up some really good numbers. He’s got a great long-term model. I think he’s doing a rather remarkable job at Reddit.”

The company operates a dynamic platform that facilitates the formation of digital communities centered around specific interests, allowing users to engage in conversations by sharing experiences, posting links, and uploading multimedia content. Since March 20, the company has been listed on the New York Stock Exchange, marking a significant milestone in its growth trajectory.

In August, Cramer, mentioning “the eighth-largest IPO”, called it a “pleasant surprise”. He went on to say:

“After speaking to CEO Steve Huffman, a.k.a. “spez,” I think Reddit has the potential to be a good destination for advertisers, but the digital advertising market’s gotten tougher as of late. That didn’t stop Reddit from reporting a pair of strong quarters since it became public. I say keep up the good work, spez—you’re going higher.”

On October 9, Jefferies analyst John Colantuoni initiated coverage on Reddit (NYSE:RDDT) with a Buy rating and a price target of $90. Colantuoni forecasts that the company’s EBITDA will more than double in the next two years, potentially reaching around $450 million. The forecasted growth is attributed to a significant expansion in the user base, which is expected to narrow the monetization gap with competitors.

Moreover, the analyst sees potential for Reddit (NYSE:RDDT) to secure additional high-margin data licensing agreements, which could give a boost to profitability. As the applications for generative AI continue to evolve, the value of the company’s extensive database of contextual content is likely to increase, positioning the company to capitalize on these emerging opportunities.