Reddit Is Growing Above 40% a Year, So Why Is the Stock Down 40%?

Key Takeaways

• Reddit closed at $145.35 on September 29, down about 40% this year and roughly 45% below its 52-week high of $263.50.
• Second-quarter revenue grew 61% to $805 million at a 43% adjusted EBITDA margin, and consensus expects around 54% revenue growth this year.
• TIKR’s model shows the P/E multiple down around 38% over the past year while earnings grew, so the drop in the shares comes from a lower multiple.
• Third-quarter revenue guidance of $860 million to $870 million sets up the next test of how quickly growth is slowing.

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Revenue Growth Is Still Strong but Slowing

Reddit (RDDT) runs a user-generated content platform that earns money mainly from advertising, plus premium subscriptions and data licensing. Revenue reached $2.2 billion in fiscal 2025, up 69% from $1.3 billion.

In the second quarter, it grew 61% to $805 million, and daily active unique users rose 18% to 130.3 million. The chart below adds consensus estimates through fiscal 2030.

Analysts expect revenue near $3.4 billion this year, up around 54%, then around $4.5 billion in fiscal 2027 and around $7.7 billion by fiscal 2030, roughly 3.5 times the fiscal 2025 level.

Growth slows steadily along the way, from around 54% this year to around 32% in fiscal 2027 and around 17% by fiscal 2030. Reddit’s own third-quarter guidance is $860 million to $870 million.

Pinterest, another advertising-funded platform built on user content, grew second-quarter revenue 18% at a 26% adjusted EBITDA margin, against 61% and 43% at Reddit.

Profits Are Scaling With the Business

Profits have kept pace with growth. Normalized EPS rose from $2.45 in fiscal 2024 to $4.54 in fiscal 2025, up around 85%, and second-quarter net income was $253 million, or 31% of revenue.

Free cash flow reached $261 million in the quarter, Reddit repurchased $235 million of its stock, and it holds about $2.8 billion in cash and marketable securities. The chart below shows consensus estimates through fiscal 2030.

Analysts expect EPS of around $7.70 this year, around $9.70 in fiscal 2027, and around $13 by fiscal 2030. This year’s earnings are expected to grow around 69% against around 54% for revenue, then slow to around 26% in fiscal 2027.

Estimates barely move between fiscal 2028 and fiscal 2029, so the outer years deserve less weight than the near-term figures.

See historical and forward estimates for Reddit stock (It’s free!) >>>

Should You Buy Reddit Stock?

TIKR’s valuation model connects growth and margins to a possible return, starting from the September 29 price of $145.35.

Over the past year, it shows the shares down around 28% and the P/E multiple down around 38%. The decline came from a lower multiple, since earnings grew over the same stretch.

In the mid case, revenue grows around 23% a year through 2035, and net margin rises to around 36%, up from about 31% in the second quarter. EPS grows about 20% a year, and the P/E multiple shrinks about 10% a year.

On those inputs, the model points to around $300 by the end of 2030, a total return of roughly 104%, or around 18% annualized. Across the window to 2035, annualized returns run from around 11% in the low case to around 16% in the mid case and around 21% in the high case.

The bull case rests on growth above 50% this year, a 43% adjusted EBITDA margin, and a Street target of about $214, about 47% above the current price. Even the model’s low case shows a positive return.

Bears will focus on how quickly growth is expected to slow, from around 54% this year to under 20% by fiscal 2030. Revenue is growing far faster than users, so the growth depends on earning more from each user, and a beta near 2 means the shares can move sharply when expectations change.

See how Reddit performs against its peers in TIKR (It’s free!) >>>

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.

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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!