Reddit, Inc. (RDDT): A Bull Case Theory

We came across a bullish thesis on Reddit, Inc. on Value investing subreddit by raytoei. In this article, we will summarize the bulls’ thesis on RDDT. Reddit, Inc.'s share was trading at $193.14 as of January 28th. RDDT’s trailing and forward P/E were 90.46 and 57.14 respectively according to Yahoo Finance.

Reddit, Inc. operates a digital community in the United States and internationally. RDDT presents an interesting case for a quick-and-dirty valuation based on projected revenue growth through 2029. Analysts’ estimates suggest revenue could reach roughly $5.83 billion by 2029, averaging Morningstar and Discounting Cashflows projections.

Accounting for an expected ~8% annual dilution, the share count may rise to 267 million, implying revenue per share of $21.8. To estimate potential returns, we examine three price-to-sales (P/S) scenarios: the current lofty 20x multiple, a more moderate 15x reflecting early-stage Meta’s average P/S post-IPO, and a mature peer benchmark of 9x, similar to Meta and Google today.

Applying these multiples yields implied 2029 share prices of $436, $327, and $196, respectively. Compared to the last closed price of $209, these translate to annualized returns of 20.2%, 11.8%, and a potential decline if P/S compresses to mature peer levels. Given the current sales-based approach—necessary because Reddit has yet to report a full year of GAAP-positive earnings—this methodology favors stability over speculative earnings guidance, especially since analysts’ profit estimates vary widely.

Reddit is actively investing in DAU growth and market expansion, and if revenue exceeds current estimates, upside could be substantial. For investors seeking a reasonable risk-reward balance, entry around $150 per share may offer a margin of safety, with expected returns in line with a target of roughly 15% per year over the next five years, while keeping an eye on whether RDDT’s growth trajectory sustains its high P/S multiple.

Previously, we covered a bullish thesis on Reddit, Inc. (RDDT) by mylizard in December 2024, which highlighted the platform’s untapped profit potential through improved user engagement, content authenticity, and optimized advertising. RDDT’s stock price has appreciated by approximately 15.53% since our coverage due to growing market optimism. Deep Value Returns shares a similar thesis but emphasizes a forward-looking, revenue-based valuation through 2029, exploring multiple P/S scenarios.

Reddit, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 80 hedge fund portfolios held RDDT at the end of the third quarter which was 74 in the previous quarter. While we acknowledge the risk and potential of RDDT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RDDT and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.