Shares of Reddit (NYSE: RDDT) have plunged from the peak they touched soon after the social media company went public in March. While an initial surge sent Reddit stock to nearly $75 per share, it's been downhill ever since. The stock has tumbled more than 40% from that all-time high.

Analysts at Loop Capital are optimistic that a rebound is coming. The investment bank initiated coverage of Reddit stock on Monday, giving it a "buy" rating and a $55 price target. While that price target is well below where the stock traded in March, it still represents upside of about 30% from the current price.

Social media can be a great business. Content comes from users, capital spending is often minuscule, and gross margins can be through the roof as ad spending rolls in. This is the general thesis behind Loop capital's optimistic outlook.

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Source Fool.com