Key Stats for Reddit Stock
- Price Change: -7.4%
- Current Price: ~$140
- Advanced Model Target: $372
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What Happened?
Shares of Reddit, Inc. (RDDT) slid 7.4% to close near $140 on Friday, caught in a sector-wide selloff triggered by weak results from peers like Snap (NYSE:SNAP) and Pinterest (NYSE:PINS).
The decline was driven by investor fears of an “Ad Recession”, as brands reportedly cut “experimental” budgets on smaller platforms to focus on proven giants like Meta Platforms (NASDAQ:META).
Despite the negative sentiment, Needham reiterated its Buy rating, arguing that Reddit’s fundamentals remain disconnected from the panic.
The firm highlighted Reddit’s unique position in AI data licensing, noting that its human-generated content is becoming a critical asset for Large Language Models (LLMs), a revenue stream Snap and Pinterest lack.
Meanwhile, Raymond James also maintained a positive outlook, citing strong user growth and the rollout of new “performance” ad tools that are improving conversion rates for advertisers.
The selloff comes just days after Reddit reported stellar growth, with TIKR data showing a 69.4% revenue CAGR forecast, a figure that far outpaces the single-digit growth seen at its struggling peers.
With the stock now trading significantly below its recent highs, the debate is whether this is a structural slowdown or a rare “guilt by association” buying opportunity.
See analysts’ growth forecasts and price targets for Reddit stock (It’s free!) >>>
Is Reddit Undervalued Today?
In the recent earnings call, CEO Steve Huffman distinguished Reddit from traditional social media by emphasizing its “intent-based” user behavior.
He stated: “People come here to find trusted perspectives… and increasingly to engage directly with brands. This is intent, not just scrolling.”
Regarding the AI opportunity, management remains bullish on their high-margin data licensing business.
He noted: “Our data is the foundation for the next generation of AI… We are seeing accelerating demand for our corpus from model builders.”
The leadership team believes that as advertisers seek alternatives to the “black box” algorithms of competitors, Reddit’s contextual targeting will continue to win share.
Read the full Reddit Transcript on TIKR to see the AI Data Strategy >>>
According to TIKR’s Advanced Valuation Model, the current market price of $140 ignores the company’s exploding margins and AI potential.
- Target Price: $372
- Current Price: ~$140
- Potential Upside: +165.7%
Valuation Model Deep Dive
The investment case for Reddit is shifting from a pure “ad play” to a hybrid “Data & Ads” platform.
The model suggests that the market is incorrectly grouping Reddit with struggling social networks, missing its unique data monetization angle.
- The Fair Value Gap: At $140, the stock trades at a steep discount to the $372 target, implying the market has priced in a recession that isn’t showing up in Reddit’s actual numbers.
- The Growth Reality: The model assumes a massive 69.4% Revenue growth rate, driven by the dual engines of advertising and data licensing.
- The Profitability Check: With Net Income Margins forecast at 27.5%, Reddit has arguably the best unit economics in the social media sector, giving it immense operating leverage as it scales.
If Reddit can prove its ad business is resilient to the “Snap Contagion,” the rebound to $372 could be rapid.
Conclusion: A data powerhouse priced like a struggling social network. With a 166% upside potential to the $372 target, Reddit offers a compelling entry for investors who believe content is king in the AI era.
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How Much Upside Does Reddit Stock Have From Here?
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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 stocks mentioned. Thank you for reading, and happy investing!
