Key Takeaways
- Oppenheimer cut Reddit to Perform from Outperform on Oct. 30, removed its price target, and reissued the note on Nov. 13.
- Reddit’s third-quarter revenue rose 53%, but the company warned that daily users could fall this quarter as Alphabet’s Google sends it less search traffic.
- Wall Street’s consensus target of $150 sits 51% above the price, and the stock trades at 12x forward earnings against a one-year average of 25x.
- Oppenheimer’s caution looks justified until 2027 earnings estimates stop falling and daily users find a floor.
Reddit (RDDT) is 62% below its 52-week high, and Oppenheimer is in no hurry to buy the dip. The firm cut Reddit to Perform from Outperform on Oct. 30, the day after its third-quarter report, and removed its price target, citing uncertainty over Reddit’s move to logged-in use and its Google relationship, according to TheFly. It reissued the note on Nov. 13.
Alphabet (GOOGL) is a big part of the problem: its Google search is sending Reddit fewer visitors, and Reddit has warned that its daily users could shrink this quarter.
Search Traffic Is Falling Fast
Reddit’s third-quarter revenue rose 53% to $895 million, and free cash flow nearly doubled to $363 million. But CEO Steve Huffman said on the Oct. 29 call that search referral traffic was “down meaningfully.” In October, he added, “search traffic has dropped by more than 1 million referrals on average per week.”
If that keeps up, he said, “total DAUqs could fall in Q4 by a low double-digit percentage from our current base of 130 million DAUqs.” And the fourth-quarter guide of $1 billion to $1.03 billion means revenue growth slows to about 40%.
Analysts Are Still Marking Reddit Down
Oppenheimer wasn’t alone. KeyBanc and Citizens JMP downgraded Reddit the same day, Evercore ISI followed, and Loop Capital cut it to Hold with a $100 target on Nov. 2. Wall Street’s average target came down with them:
The consensus target is $150, down from $240 a year ago. Targets run from $100 to $272, and even the average sits 51% above the Nov. 12 close of $99.55.
Does $150 Add Up?
On estimates, Reddit still looks like a fast grower. Analysts expect normalized EPS of $7.72 this year and $9.29 in 2027, up from $4.54 in 2025:
But the 2027 estimate was $9.68 in late October, before the report, and 2028’s has dropped to $10.90 from $11.84. Investors are paying just 12x forward earnings, against a one-year average of 25x:
On 2028 estimates, $150 works out to about 14x, still well under that average. The multiple is this low because investors don’t trust the estimates yet.
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
Why I’d Wait for Reddit’s February Report
Reddit does have $3.03 billion of cash and marketable securities, and its logged-in and app users, who Huffman said bring in “over 80% of the monetization,” grew from the second quarter.
Still, I’d side with Oppenheimer here. A $150 target depends on 2027 estimates that analysts are still cutting. The fourth-quarter report in early February will show how far daily users fell and whether logged-in users kept growing. If they did, 12x will look too cheap.
So What Is Reddit Stock Actually Worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Reddit could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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!
