Key Takeaways
- Guggenheim cut its Reddit price target to $140 from $170 on Nov. 10 and kept its Buy rating.
- Reddit is 62% below its January high after warning that search traffic from Google is falling and that daily users could drop in the fourth quarter.
- Guggenheim’s target works out to about 16x the earnings analysts expect over the next twelve months, below the stock’s 25x average over the past year.
- Guggenheim’s $140 depends on Reddit’s logged-in users continuing to grow. Reddit’s fourth-quarter report in early February will show whether they are.
Reddit (RDDT) is 62% below its January high, and Guggenheim still rates it a Buy. On Nov. 10, the firm cut its price target to $140 from $170, which is still 42% above the stock’s Nov. 10 close of $98.67.
Google took the traffic
The damage came with Reddit’s third-quarter report on Oct. 29. Revenue rose 53% to $895 million, but CEO Steve Huffman wrote in the shareholder letter that search referral traffic “was down meaningfully in Q3, with the decline accelerating later in the quarter.”
U.S. daily active uniques fell 2% from a year earlier to 50.7 million, and Huffman warned on the call that if October’s trend held, total daily users “could fall in Q4, by a low double-digit percentage” from 130 million. Fourth-quarter revenue guidance of $1.00 billion to $1.03 billion works out to 38% to 42% growth, down from 53%. The stock lost 34% in the week after the report.
TIKR tracks 32 analysts on Reddit. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Reddit, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Reddit’s Analyst Ratings
Guggenheim is more cautious than the Street
This is Guggenheim’s second cut since the report: on Oct. 30, it lowered its target to $170 from $255, and it kept its Buy rating both times. Analyst Michael Morris tied the latest cut to continued search referral pressure in the fourth quarter and Reddit’s longer-term move to a primarily logged-in platform. Its $140 sits below the $151 average target of the analysts who cover Reddit, and those targets now run from $100 to $272. That average has fallen from $240 a year ago, and from $214 at the end of September alone:
How Reddit gets to $140
Analysts expect Reddit to earn about $8.50 a share on a normalized basis over the next twelve months, and $140 is about 16x that. They see earnings per share growing every year through 2028:
And the report barely dented them. The 2027 consensus on a GAAP basis slipped to $6.86 a share from $7.09 a month ago, while 2026’s rose to $5.48 from $5.38.
So the question is the multiple. Reddit trades at 12x forward earnings, near its low for the past year and well under its 25x average:
At the end of September, a month before the report, it traded at 17x. Guggenheim’s $140 works out to a little less than that.
The users who pay are still growing
The biggest risk is Google. Reddit’s data-licensing deal with Google comes up for renewal in the first quarter of 2027, according to Bank of America, while the search traffic Google sends keeps falling. Reddit is also moving to a primarily logged-in site, starting with tests in select markets outside the U.S. in the fourth quarter, which will likely cost it some reach in exchange for deeper engagement.
But the users falling away are mostly the ones who pay least. COO Jen Wong said logged-in and app users bring in over 80% of Reddit’s monetization, and those users grew from the second quarter. U.S. revenue per user rose 53% to $13.82 in the third quarter.
Guggenheim’s $140 asks for less than it looks: investors would be paying roughly what they paid in September for earnings analysts have barely cut, and Reddit itself bought back $100 million of stock in the third quarter at an average of $149.81 a share. Its fourth-quarter report in early February will show whether logged-in users keep growing while the rest drift away.
So what is Reddit stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
