Key Takeaways
- Needham kept its Buy rating and $300 target on Reddit on Oct. 9, 92% above the Oct. 8 close, after the stock lost 40% from its January high.
- Slower guided growth, choppy search traffic and doubts about renewing its AI data deal with Google have weighed on the shares this year.
- Earnings estimates are rising, and the stock trades at 18.3x forward earnings, near its one-year low and well below its 27.7x average.
- Needham’s target implies about 35x forward earnings, so the call is plausible but stretched.
Reddit (RDDT) has lost 40% since its Jan. 13 closing high, and Needham hasn’t budged. On Oct. 9, analyst Laura Martin kept her Buy rating and $300 target, 92% above the stock’s $156.47 close on Oct. 8.
Three hits since January
On Jan. 27, Cleveland Research analyst Ross Walthall warned of slower growth in 2026. The stock fell 9% that day.
On July 30, Reddit reported second-quarter revenue up 61% to $805 million, but management guided to 47% to 49% growth for the third quarter. CEO Steve Huffman said “Search referrals were choppy in the quarter and traffic was more volatile later in the quarter.”
In mid-September, Wells Fargo said it sees a lower chance that Reddit’s AI data deal with Alphabet (GOOGL) renews.
Needham still sees $300
Martin’s case leans on AI: she has argued that Reddit’s human-written content has no comparable substitute at its scale, and in June she said its data deals with Alphabet and OpenAI could renew at higher fees.
Does $300 add up?
The rest of the Street is more cautious: the consensus target has slid from $252 in early February to $214, near its low for the year.
Still, nobody’s capitulating. The lowest target rose from $110 to $130 over the year, and Buy ratings went from 13 to 16.
Earnings estimates point the same way. Analysts expect normalized EPS to climb from $4.54 in 2025 to $11.85 in 2028.
And they’ve risen since the July report: Yahoo Finance’s tally of 29 analysts has lifted its 2027 EPS estimate to $7.07 from $6.47 90 days ago. (It counts earnings differently than TIKR does.)
Meanwhile, the stock is cheap against its own history: it trades at 18.3x forward earnings as of Oct. 8, close to its one-year low and well under its 27.7x average.
Needham’s $300 works out to about 35x the $8.55 a share analysts expect over the next twelve months. That’s well above the past year’s average, though far short of January’s 48.6x peak.
Cheap, but $300 is a reach
The risk is traffic. If search referrals keep sliding and the Alphabet deal doesn’t renew on better terms, that 47% to 49% guide could be just the start of the slowdown.
My take: Needham’s call is plausible but stretched. Rising estimates and a near-bottom multiple leave room for a rebound. But $300 needs investors to pay an above-average multiple for slowing growth.
The next test is Reddit’s third-quarter report, against its $860 million to $870 million revenue guide. A beat there, plus a higher-fee renewal with Alphabet, would make $300 look a lot more reasonable.
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!
