Key Stats for Reddit Stock
- Current Price: $170.38
- Target Price (Mid): ~$394
- Street Target: ~$227
- Potential Total Return: ~131%
- Annualized IRR: ~21% / year
- Max Drawdown: 54.99% on 3/27/26
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What Happened?
Reddit, Inc. (RDDT) closed July 22 at $170.38, down $15.46 or 8.32%, erasing close to $3 billion of market value in a single session. The trigger was a Wall Street Journal report, relayed by CNBC, that Reddit executives have internally discussed shutting off Google’s access to the platform’s content for AI training as their licensing agreement nears expiration. No decision has been made, and the two companies remain in renewal talks.
The contract is reported at roughly $60 million a year. TIKR’s consensus estimates put Reddit’s 2026 revenue near $4.3 billion, which makes the disputed line about 1.4% of what the company is expected to earn this year. Investors repriced the equity by roughly fifty times the contract’s annual value, so the selloff was never about the $60 million itself. It was about what a breakdown would signal, and Reddit’s investor relations materials do not answer that. What helps is that CEO Steven Huffman set out his position on this exact question in public, on June 3.
A Small Line Item Carrying a Large Story
Reddit does not disclose the Google deal separately. It sits inside “Other revenue,” which the company reported at $39 million in the first quarter of 2026, up 15% year-over-year, against $625 million of advertising revenue, growing 74%. Data licensing, the business of selling access to Reddit’s conversation archive for AI model training, is small on the income statement and load-bearing in the story investors tell about the stock.
That gap explains the reaction. Per Stocktwits, Wells Fargo estimated Reddit could lose $500 million in AI licensing revenue and face user headwinds if it walks away from Google, while DA Davidson flagged risk to daily active user growth in the coming quarters.
The decision is Reddit’s own, though the pressure is industry-wide. The Journal reported that USA Today, Politico, Reuters, The Economist, and People Inc. are reassessing their Google relationships, and the mechanism is measurable: Pew Research Center found users clicked a standard search result 8% of the time when an AI summary appeared, against 15% when none did, and clicked a link inside the summary just 1% of the time. Britain’s Competition and Markets Authority granted publishers the right on June 3 to opt out of Google’s AI features without disappearing from search. Reddit is negotiating from inside a broader revolt, not alone and not as a bystander.
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Huffman Set Out His Position on June 3
At Bank of America’s Global Technology Conference, Huffman was asked directly about Google’s product announcements and the upcoming license renewals.
“We will make sure that Reddit gets full value for what we provide to the ecosystem,” he said. He described the arrangements as unusually intricate, noting the deals “are complex. They’re almost like M&A deals,” while calling the relationships mutually valuable. He was blunt about the leverage: “There is no LLM on Earth that wasn’t trained on a, that wasn’t significantly trained on Reddit’s data, including Google and OpenAI with whom we have big partnerships and including other folks with whom we have big lawsuits.”
Those remarks predate the Journal’s report by six weeks, so they establish intent rather than the current state of talks. The posture still reads as deliberate. Reddit executives reportedly want usage-based fees replacing the flat annual sum, and Huffman was signaling as much in June. A company with no leverage does not tell a room of analysts that every major model was trained on its archive.
He also declined to treat search disruption as existential: “Indeed, a few companies have been vaporized by AI, but not Reddit,” arguing the platform serves what he called questions with no answers, where readers want other people rather than a summary. His confidence had a balance-sheet expression too. “We’ve bought 1 million shares this quarter already,” he said, adding that Reddit would keep buying as opportunities arise.
Wall Street Pays a Premium for Growth It Keeps Discounting
Reddit trades at 8.67x NTM (next twelve months) enterprise value to revenue and 19.58x NTM EV/EBITDA. Among interactive media peers on TIKR, Alphabet sits at 7.41x NTM EV/revenue, Meta Platforms at 6.05x, and Pinterest at 2.51x.
The premium is defensible on growth. Reddit’s forward two-year revenue CAGR runs 39.2% against forward EBITDA CAGR of 52.5%, and gross margin sits at 91.4%. Huffman framed the cost structure plainly in June: “We’re not building data centers.” He credited the companies that are adding, “They build the data centers. We rent the GPUs.”
What complicates the premium is the multiple’s direction. NTM EV/EBITDA has compressed from 37.05x on June 30, 2025, to 19.58x now, while the company beat consensus revenue in all five of its most recently reported quarters, most recently by 8.79%. The stock is down roughly 25% year-to-date per CNBC. Investors keep assigning a lower multiple to results that keep improving, a pattern that resolves as either a durable derating or a sharp reversal.
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TIKR Advanced Model Analysis
- Current Price: $170.38
- Target Price (Mid): ~$394
- Potential Total Return: ~131%
- Annualized IRR: ~21% / year
- Revenue CAGR (Mid): ~26%
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TIKR’s mid case puts Reddit near $394 by the end of 2030, a total return of about 131% over roughly 4.4 years. The mid case is the right anchor while the Google negotiation is open, since the low case still compounds at about 15% annually and brackets the range usefully.
Two drivers carry the roughly 26% revenue CAGR:
- Advertising. Ad revenue grew 74% year-over-year in the first quarter, with active advertisers up more than 75%, and performance advertising ran above 60% of ad revenue per the Q1 call.
- User conversion. Huffman put US weekly users at roughly 200 million against about 50 million US dailies in his June remarks, with a stated goal of 100 million dailies. Machine learning in the feed, he said, “will carry the most load.”
Margin expansion toward a mid-case net income margin near 33% rests on the capital-light structure: revenue scales without data centers or heavy hiring. The primary risk is that AI Overviews compress referral traffic faster than the feed work converts weeklies into dailies.
Upside: a usage-based Google renewal validates dynamic pricing across future AI licensing deals and reprices the data business.
Downside: talks collapse, the licensing line shrinks, referral traffic keeps eroding, and the multiple compresses toward peers grow half as fast.
Conclusion
July 30 answers this. Reddit reports second-quarter results after the close, having guided to $715 million to $725 million, with consensus near $733 million and EPS around $0.97. The revenue line matters less than the licensing commentary attached to it.
Watch “Other revenue.” Something at or above $42 million alongside management describing an active, constructive renewal suggests the leverage is real, and July 22 repriced a headline rather than a business. A flat or declining licensing line paired with hedged language on Google would confirm the flat-fee era is ending without a replacement, and the derating has further to run.
One more line deserves attention on that call: US daily active users, which Reddit reported at 53.5 million for the first quarter, up 7%. If AI Overviews are draining the funnel, that number breaks before revenue does.
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Should You Invest in Reddit?
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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!
