RDDT: $428 price target

For full-year 2026, this fiscal year, Reddit is projected to have $1.02 billion in net income and $3.23 billion in revenue. Let’s strip out the current AI deal of $100 million and assume a 30% tax rate. That would bring net income to about $995 million, giving them margins of 32.5%.

Let’s say growth slows down to 45% (Which I don't think it will), which is well below what they are currently growing at. That would bring revenue up to $4.6 billion. Applying a 32.5% margin gets you $1.495 billion in net income, which is still less than what I said in the post.

These are the assumptions I’m willing to bet on because Reddit’s business model is very scalable. They do not need to increase costs significantly to bring in more advertisers, so they're more than likely going to be able to continue with the same margins. A 45x P/E ratio is not ridiculous when the company is growing top-line revenue by 45%, not including the AI deal with Apple growing at 18.6% and having a 35.5 P/E ratio.

Now let's include the new and potential AI deals of Google, Anthropic, and OpenAI of $150 million EACH; based on every piece of information, it is very likely that these deals are renewed at a total value of $450 million, which goes straight to the bottom line. Let's assume that there's a tax rate of 30%, so the total amount it would go to net income would be $315 million.

Bringing the total net income to $1.81 billion, multiply by a 45 p/e ratio = 83.2 B market cap by NEXT YEAR, or a 137% change if these AI deals go through and a share price of $428 by NEXT YEAR.