Key Stats for Reddit Stock
- Past-Week Performance: +7.5%
- 52-Week Range: $80 to $283
- Current Price: $142
What Happened?
Reddit stock (RDDT) closed at $142.1 on February 24, trading at nearly 30x forward earnings as the company’s sixth consecutive quarter of 60%-plus revenue growth reframes it from a niche social platform into the internet’s most defensible source of human-generated content at a moment when AI-driven platforms are desperately hunting for authentic data.
The UK’s Information Commissioner’s Office applied immediate downward pressure on February 24 when it fined Reddit £14.5 million ($19.5 million) for failing to verify children’s ages and neglecting required data protection assessments, though Reddit’s swift appeal filing the same day signaled confidence that the penalty carries limited long-term operational weight.
Beneath the regulatory noise, Reddit’s Q4 engine is firing on all cylinders, with ad revenue surging 75% year-over-year to $690 million, SMB revenue doubling, lower-funnel conversion volume doubling, and CAPI-covered conversion revenue tripling for the fourth consecutive quarter as its machine learning investments compound into measurable advertiser returns.
The market is actively re-rating Reddit from a speculative social media bet into a premium AI-infrastructure play, reflected in its 30x forward earnings multiple commanding a sharp premium over Meta at 21.4x and Snap at 9.4x, as advertisers and LLM developers alike recognize Reddit’s 24 billion posts as an irreplaceable corpus of real human intent.
Chief Operating Officer Jennifer Wong stated on the Q4 earnings call that “Reddit is very well positioned for the changes in our ever-evolving consumer decision journey and very well positioned for what’s coming in agentic commerce,” contextualizing Reddit’s role as the trusted recommendation layer that agents will rely on before executing purchasing decisions at scale.
On the institutional front, both Coatue Management and Tiger Global trimmed their Reddit positions as of December 31, cutting stakes by 5.9% to 5.6 million shares and 17.7% to 3.8 million shares respectively, representing profit-taking rather than a thesis break given Reddit’s simultaneous announcement of a $1 billion share repurchase program backed by $2.5 billion in cash.
Over the next three to five years, Reddit’s combination of irreplaceable human content, accelerating AI search adoption with Answers WAU growing from 1 million to 15 million in a single year, and deepening LLM partnerships with Google and OpenAI positions it to become the default trust layer of the AI internet, a structural advantage no competitor can quickly replicate.
Wall Street’s Take on RDDT Stock
Despite the $19.5 million UK fine creating short-term noise, Reddit’s planned appeal and its $2.5 billion cash position dwarf the penalty, keeping the company’s growth trajectory firmly intact as it enters what management projects as another year of 50%-plus revenue expansion.
The fundamental case centers on Reddit’s street consensus projecting revenue reaching $3.1 billion in fiscal 2026, a 42.7% jump from 2025’s $2.2 billion, while normalized EPS climbs 47.4% to $6.7 and EBITDA margins expand further to 42.1%, validating the operating leverage embedded in its 91% gross margin model.
Wall Street has responded to Reddit’s breakout year with growing conviction, as 30 analysts now cover the stock with 16 Buys and 6 Outperforms against just 1 Sell, pushing the mean price target to $233.2, representing 64.1% upside from the current $142.1 close.
The target spread tells an equally compelling story, with the Street’s most bullish analysts pricing Reddit at $300.0 while bears anchor at $125.0, a range that reflects genuine disagreement over how fast its AI search monetization and agentic commerce positioning will compound into revenue.
What Does the Valuation Model Say?
Anchoring the bull case in hard math, TIKR’s mid-case valuation model prices Reddit at $472.0 by December 2030, implying a 232.2% total return and a 28.1% annualized IRR from today’s levels, a projection that becomes more credible given Reddit Answers’ user base growing 15x in a single year.
The primary risk is multiple compression, as Reddit’s 30x forward earnings premium leaves virtually no margin for execution stumbles, and institutional trimming from both Tiger Global (down 17.7% to 3.8 million shares) and Coatue (down 5.9% to 5.6 million shares) signals that even believers are managing position size at current valuations.
At $142.1 with 64% upside to the Street mean and a DCF pointing to more than triple the current price by 2030, Reddit looks materially undervalued for investors with a multi-year horizon willing to hold through near-term regulatory and multiple-compression volatility.
Should You Invest in Reddit, Inc.?
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