Reddit (RDDT): Exploring Whether Recent Share Price Strength Still Leaves Upside in the Valuation

Reddit (RDDT) has quietly turned into one of the year’s stronger media-tech trades, with the stock up about 34% year to date and nearly 49% over the past year as revenue and earnings trend higher.

See our latest analysis for Reddit.

That momentum reflects a shift in how investors are pricing Reddit’s growth story, with a solid year to date share price return helping drive a 48.7% one year total shareholder return as the stock consolidates around $222.76.

If Reddit’s run has you thinking more broadly about the space, it might be worth scouting other high growth tech names. You can use our high growth tech and AI stocks as a starting universe.

But with shares now hovering near analysts’ targets and a rich premium to traditional media platforms, is Reddit still trading below its true long term potential, or is the market already baking in years of rapid growth?

Most Popular Narrative: 7.5% Undervalued

With Reddit closing at $222.76 against a narrative fair value near $240, the valuation case leans on aggressive growth and margin expansion assumptions.

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, rising margins, and a premium future earnings multiple combine into that fair value estimate? The full narrative breaks it down.

Result: Fair Value of $240.70 (UNDERVALUED)

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

However, sustained ad reliance and moderation challenges could quickly pressure margins and user growth, testing how durable Reddit’s current narrative really is.

Find out about the key risks to this Reddit narrative.

Another Angle: Multiples Tell a Hotter Story

Reddit might look modestly undervalued on narrative fair value, but its 120.9x price to earnings towers over the 16x industry average, 38.9x peer average, and a 37.8x fair ratio. That gap signals real downside risk if sentiment cools, even with strong growth.

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

Build Your Own Reddit Narrative

If you are not fully aligned with this view, or prefer to dive into the numbers yourself, you can build a custom Reddit storyline 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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