r/valueinvesting
RDDT Price Target: $425, Current: $181
Author projects RDDT to hit $428 next year driven by scalable ad margins and $450M in new AI data deals with tech giants.
- Highly scalable business model allows maintaining high margins (32.5%) without significant cost increases.
- Massive upside potential from renewing and expanding lucrative AI data licensing deals with tech giants.
- Justifiable premium valuation (45x P/E) supported by aggressive top-line revenue growth (45%+).
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.
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.
Ergo. I rest my case.
Agreed, but don’t call me Shirley
I set a price target of $185 per my valuation. Add a 15% MOS and it’s a buy sub $157. I don’t usually add in a MOS because my valuations are usually tend to have an overly conservative bias. So I’m pretty happy buying in the low $160s and have built the majority of my position.
Yes. This is what I mean by having a plan of attack.
Yes my ACB is in the $140s, so I’m feeling pretty good about my position. Wouldn’t be against adding a few hundred more shares at the right price, but I have a sizeable enough position that I don’t have to be desperate and would rather get a good price
Yes.
It is, but plan for it and be
disciplined in buying below 150.
Don’t chase momentum.
The price was 150 not too long ago,
why didn’t you post this piece earlier ?
- PE Ratio (TTM)51.97
- EPS (TTM)3.50 , Isn't NVDA a better place to be or Google ?
Regarding goog: why are you comparing pe ratios between these two companies only? one is a company growing revenue 70% yoy the other is growing it 25ish percent.
You can also own multiple stocks.
because i m thinking about downside protection , Why analysts view them as stronger than Reddit:
Huge revenue bases
Strong profitability
Direct exposure to AI infrastructure
Lower business‑model risk
My price target is $3,850.
Too low, wouldn't you say?
U.S. GDP is $31 T. Can one company be worth half of U.S. GDP? That just seems extremely unlikely to me. Even doubling, NVDA would be 1/3 of US GDP.
I prefer stocks that have a small enough Market caps that big growth is more possible. I like NVDA more as a part of the funds I own because it’s one of the most likely stocks to get reasonable and expected positive returns
I bought a starter position at $100 on borrowed conviction, forgot about it for awhile, and then did more research and went in heavy around $140
Take “total net income to $1.81 billion, multiply by a 45 pe ratio”
Garbage analysis. This is not value investing.
😂