Reddit: Rapid Earnings Growth With Room For An AI Expansion

Reddit is rated a buy with a fair value of $230, implying 50% upside from current levels, based on robust earnings growth and margin expansion. RDDT consistently beats revenue guidance, with recent quarters exceeding midpoint by 8–12%, and Q3 growth could reach the low-to-mid-60% range. Advertising revenue is broad-based, driven by automation and proprietary data, with international and SMB channels accelerating and Reddit Max boosting conversion efficiency. Risks include loss of user disclosure metrics, expiring AI/data licensing contracts, regulatory challenges, and elevated SBC, but a strong balance sheet and monetization trends support the thesis. I rate Reddit ( RDDT ) a buy with a fair value of about $230 per share against the current $155.36, based on 24x my base-case 2028 adjusted earnings of $9.71 per share. The first reason for the optimism is This article was written by Krzysztof Bogdanski 89 Followers Follow I am an individual investor with a long-term focus on identifying high-quality businesses. Having most of my past investments appreciating aggressively, I tend to sell them when they are deemed to have run too far. My primary areas of interest include: technology, financial services, software, and businesses benefiting from durable competitive advantages and secular growth trends. While I closely follow macroeconomic developments and capital markets, my investment decisions are driven primarily by company fundamentals, management quality, competitive positioning, capital allocation, and long-term earnings potential rather than short-term market movements. I recently graduated from IB World School 002709 with 38 points. This autumn, I'm starting a Bachelor's degree in Finance and Accounting at SGH Warsaw School of Economics (class of '29). As soon as I become eligible, I intend to enroll in the CFA Program to further strengthen my understanding of financial markets. Although I am at the beginning of my professional journey and do not yet have institutional investing experience, I have been actively investing for 2 years and have developed a research-driven investment process. Since March 2024, my family portfolio has generated a return of approximately 160% through investments in U.S. equities. While I recognize that past performance over a relatively short period does not guarantee future results, I am keen to now take it much more seriously (with more time to both deepen my knowledge and perform analyses).