Reddit (RDDT): Revisiting Valuation After Recent Share Price Swings and Evolving Growth Expectations

Reddit (RDDT) has quietly put up a mixed tape for investors lately, with the stock up about 16% over the past month but still down roughly 16% over the past 3 months.

See our latest analysis for Reddit.

Stepping back, Reddit’s 1 year total shareholder return of about 32.7 percent and year to date share price return of roughly 35 percent suggest momentum is still building, even with the recent pullback from its 7 day share price decline.

If the Reddit move has you rethinking where growth could come from next, this might be a good moment to scout high growth tech and AI stocks for more potential standouts in the space.

But with revenue and profits accelerating, the stock still trading at a meaningful discount to some fair value estimates, and only a modest gap to Wall Street targets, is this a fresh entry point or is future growth already priced in?

Most Popular Narrative Narrative: 6.6% Undervalued

With Reddit last closing at 224 dollars against a narrative fair value near 240 dollars, the current setup leans toward moderate upside if the growth story holds.

The value of Reddit's data for AI/LLM training is gaining wider recognition, as demonstrated by their data licensing deals and status as a top-cited source for LLMs. Reddit's growing corpus and unique conversation base position the company to expand high-margin data licensing revenues in the years ahead.

Read the complete narrative.

Curious how a fast scaling ad engine plus high margin data licensing can still justify a premium future earnings multiple and steep profit step up? The narrative walks through the exact revenue runway, margin lift, and valuation math that has analysts penciling in far stronger earnings power than today, and why that could still leave room above the current share price.

Result: Fair Value of $239.76 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, softer engagement trends and uncertainty around the durability of AI data licensing deals could still derail the upbeat growth and valuation narrative.

Find out about the key risks to this Reddit narrative.

Another Way to Look at Valuation

On earnings, Reddit looks far richer than the narrative fair value suggests. The stock trades on a 121.6 times price to earnings ratio versus a 37.6 times fair ratio, a 16.6 times industry average and 37.2 times peer average, which could signal real downside if growth stumbles.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Reddit Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a fresh Reddit view in minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Reddit.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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