How I Get to PT $550 RDDT in 2027 — The Math Behind My Price Target

In my last post I gave my Reddit price targets: $550 in 2027 and around $900 by FY2028.

A lot of serious investors questioned the math, and some of the valuation math in my previous post was not explained correctly. So I will explain here.

For valuation reference, I look at companies such as Cloudflare and, historically, The Trade Desk when the market was still giving very large premiums to strong growth. I am not saying they are perfect comps. I am using them as examples of what the market can pay for a high-growth, high-margin internet business.

First, the actual starting point.

# 2025 actual

Revenue: $2.203B
Net income: $530M
Net margin: 24.1%

Reddit then produced a 30.7% net margin in Q1 2026 and 31.4% in Q2.

So for my model I simply use 30% net margin going forward. No margin expansion.

I also use roughly 207M diluted shares.

# 2026

Assume revenue grows 60% (based on Q1 & Q2):

Revenue: $3.52B
Net income at 30% margin: $1.06B
EPS: \~$5.11

For a 2026 year-end price, I would value Reddit mainly on 2027 earnings, not 2026 earnings.

# 2027

Assume growth slows to 50%:

Revenue: $5.29B
Net income: $1.59B
EPS: \~$7.66

But my 2027 price target should be based on 2028 forward earnings, because by late 2027 the market will care much more about what Reddit earns in 2028.

# 2028

Assume growth slows again to 40%:

Revenue: $7.40B
Net income: $2.22B
EPS: \~$10.73

Now the 2027 valuation becomes:

40x forward P/E = $429
45x = $483
50x = $536
52x = \~$558

So this is where my $550 target for 2027 actually comes from (**assuming no margin expansion**).

It requires Reddit to enter 2028 still growing around 40%+ and the market to value it at roughly 51–52x forward earnings.

# 2029

Assume another 40% growth year:

Revenue: $10.36B
Net income at 30% margin: $3.11B
EPS: \~$15.02

That gives the following FY2028 valuation on forward 2029 earnings:

40x = \~$601
45x = \~$676
50x = \~$751
60x = \~$901

So $900 by FY2028 is clearly the bull case. **Again, assuming no margin expansion.**

With no margin expansion, Reddit would need to maintain an approximately 60x forward P/E to get there.

There is another path though.

If Reddit eventually expands net margin toward 40%, then $10.36B revenue would produce roughly $4.15B net income, or about $20 EPS.

At that point:

$20 EPS × 45 P/E = \~$900

And considering Reddit already has a 90%+ gross margin and recently produced 40%+ adjusted EBITDA margins, I don't think significant long-term operating leverage is an absurd assumption.

So my targets are basically:

2027 base-ish bull case: $430–480
2027 strong bull case: \~$550

FY2028 base-ish bull case: $600–675
FY2028 strong bull case: $750+
FY2028 everything-goes-right case: \~$900