Reddit Initiated With Overweight Rating, $225 PT

RDDT comments Analyst comments: "We are initiating coverage on Reddit with an Overweight rating and a $225 PT, based on 18x 2028E EV/EBITDA.

In our view, Reddit's investments in community and ad monetization should create a durable business with annual revenue growth above 30% and a path to a 50% EBITDA margin.

Further, we believe Reddit's data is becoming more valuable to large language models and model training, creating a potential upside catalyst into 2027.

In our view, RDDT is a unique way to participate in artificial intelligence growth with an asset-light business model.

Reddit has emerged as a trusted source of internet content, with users, known as Redditors, participating in more than 100,000 communities, known as Subreddits, and voting on response quality.

We believe this makes Reddit complementary to search, social media, the web, and large language models, providing the company with a durable source of traffic.

In turn, Reddit's content can be monetized through advertising and data licensing.

For 2026E-2028E, we project revenue of $3.24 billion, $4.30 billion, and $5.46 billion, respectively, and EBITDA of $1.43 billion, $1.98 billion, and $2.73 billion.

Our forecast is driven by daily active uniques and advertising monetization and does not reflect a material increase in Other revenue.

Our forecasts are slightly ahead of consensus in 2026E-2027E and reflect a more meaningful difference in 2028E, when we are 1% above consensus on revenue and 5% above on EBITDA." Analyst: Justin Patterson