Key Takeaways
- Argus cut its Reddit price target to $150 from $225 and kept its Buy rating, a target 49% above today’s price.
- Reddit’s stock has sunk since its third-quarter report, when management warned that search traffic from Alphabet’s Google is falling fast and daily users could drop.
- At $150, Reddit would trade at about 18x forward earnings, well below its 25x average over the past year.
- The selloff looks overdone, and Argus’s target looks cautious, as long as 2027 earnings estimates stop sliding.
Reddit (RDDT) stock has lost 59% since its January high, and on Nov. 12 Argus cut its price target to $150 from $225. It kept its Buy rating, and $150 is still 49% above today’s price of $100.37.
The trouble is Alphabet (GOOGL): Google is sending Reddit far fewer visitors as it answers more searches with AI.
Google’s traffic is drying up
Reddit’s third quarter, reported Oct. 29, looked great on paper, with revenue up 53% to $895 million. Then co-founder and CEO Steve Huffman told the call: “Our search referral traffic was down meaningfully in Q3, with the decline accelerating later in the quarter.” He warned that daily users could fall by a low double-digit percentage in the fourth quarter if the slide keeps up, and Reddit guided to fourth-quarter revenue growth of 38% to 42%.
Reddit also plans to go logged-in only, and Huffman admitted “we will likely be trading reach for engagement.” Shares sank the next day.
Argus still likes the business
Argus analyst Joseph Bonner kept his Buy as he cut the target. His read is that the search-traffic warning overshadowed the quarter itself, and Argus raised its 2026 GAAP earnings estimate to $5.55 a share from $5.31, while holding 2027 at $6.54. Guggenheim made a similar call two days earlier, cutting to $140 and keeping its Buy.
Reddit is still generating plenty of cash. Free cash flow nearly doubled to $363 million in the third quarter, and Reddit bought back $100 million of its own stock at an average of $149.81 a share, almost exactly Argus’s new target.
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
Does $150 add up?
Argus’s $150 matches the Street’s consensus target, which fell from $240 a year ago. The 32 analysts covering Reddit range from $100 to $272.
Analysts still expect normalized EPS to roughly double, from $4.54 in 2025 to $9.29 in 2027.
(Only five or six analysts make those normalized estimates. A wider group of 27 expects $6.86 a share for 2027, down from $7.09 a month ago.)
The stock trades at 12x forward earnings, near its 11x low of Nov. 2 and less than half its 25x average over the past year.
At $150, it would trade at about 18x, still well under that average.
The selloff went too far
The risk is users. If daily users fall as far as Huffman warned, and Reddit’s data-licensing deal with Google, due for renewal in the first quarter of 2027 according to BofA, comes back with less traffic attached, those 2027 estimates have further to fall.
Even so, a company guiding to about 40% growth and turning 41% of its revenue into free cash flow looks priced for something much worse at 12x. Argus is only asking for a below-average multiple on earnings that hold up, so I think its target is, if anything, on the cautious side. The fourth-quarter report in early February will show whether US daily users have stopped falling.
So what is Reddit stock actually worth?
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Disclaimer:
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