I built a model with five scenarios off two drivers, 5-year DAUq growth and 5-year ARPU growth, compounded out, with incremental revenue converting to after-tax profit at a 40% margin (roughly double the current blended margin, which is reasonable given how much of Reddit’s cost base is already fixed). Each scenario’s Year 5 profit gets a terminal multiple that scales with how fast that scenario is growing, discounted back 5 years, plus the PV of the profit stream in years 1 through 5, plus the net balance sheet value already sitting on the books. At a 13% discount rate, here’s where the five scenarios land:
·Super Bear (2% DAUq growth, 3% ARPU growth, \~5% revenue CAGR): $53/share
·Bear (6%/6%, \~12% revenue CAGR): $91/share
·Base Case (10%/11%, \~22% revenue CAGR): $168/share
·Bull (14%/16%, \~32% revenue CAGR): $308/share
·Super Bull (18%/20%, \~42% revenue CAGR): $515/share
Weight those by probability (I have it at 10/25/35/25/5) and you get a probability-weighted fair value of about $187/share at a 13% discount rate, roughly 24% above where the stock trades today.
AI summaries will surely replace digging Reddit for answers to one-off questions. AI will not change the fact that people are always going to want real conversations with real people. For a stock growing top-line numbers so quickly, their current multiples are more than reasonable.
I am building a position into RDDT, and am planning to keep adding until around $160-$165/share.
Full writeup: [https://bsntfinance.substack.com/p/rddt-is-undervalued-23-aug-2026](https://bsntfinance.substack.com/p/rddt-is-undervalued-23-aug-2026)
