Reddit’s recent stock performance in context

Reddit (RDDT) has drawn fresh attention after a volatile stretch, with the share price around $139.65 and recent returns across the past week, month, and past 3 months reflecting sharp swings in sentiment.

That recent 6.55% 1 day share price return sits against a much weaker backdrop, with a 30 day share price return of 44.67% decline and a year to date share price return of 42.27% decline. The 1 year total shareholder return is a 28.89% loss, suggesting recent volatility reflects shifting views on Reddit’s growth potential and risk rather than a clear momentum trend either way.

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With Reddit trading around $139.65 and sitting at a sizeable discount to some analyst and intrinsic value estimates, you have to ask: is the stock being overlooked, or is the market already factoring in potential future growth?

Most Popular Narrative: 267.5% Overvalued

According to Goran_Damchevski’s narrative, Reddit’s fair value sits at $38 per share compared with the recent $139.65 close. This is a wide gap that raises questions about how much growth is already priced in.

Reddit has surpassed my quarterly expectations, and I will continue to monitor if the company manages to keep up the momentum in 2025. For now, I am maintaining my 2029 forward value estimate at $11B, which roughly translates to $38 today.

For readers curious how a profitable Reddit with rising revenue, specific margin targets, and a premium future earnings multiple all connect to that $38 figure, the full narrative lays out the entire math behind that view.

Result: Fair Value of $38 (OVERVALUED)

However, that view could be challenged if Reddit’s data licensing draws tighter regulatory scrutiny, or if ad blocking and user pushback keep limiting how effectively ads can be monetised.

Another View: Our DCF Model Sees Upside

Goran’s $38 per share view leans heavily on revenue and earnings multiples, but our DCF model tells a very different story. On current inputs, it suggests a fair value of about $363.91 per share. This implies Reddit at $139.65 trades at a sizeable discount. The real question is which set of assumptions you find more realistic.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Reddit for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 53 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Reddit Narrative

If you are not convinced by these views or simply prefer to test your own assumptions against the data, you can build a complete Reddit thesis in just a few minutes, starting with 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.