Hi all,
I wanted to share my detailed DCF analysis for Reddit. Our DCF derives an intrinsic equity value of **$186 per share**, representing 30% upside to Reddit’s market price of $143 as of 28 September 2026. This is based on:
* Advertising revenue reaching $15.5bn by Year 10 (22% 10 yr CAGR), driven by monetization growth in US and user growth in International markets
* GAAP operating margin of 37% from Year 6 onwards
* ROIC in the high-40s to low-50s through much of the forecast period, gradually converging to 40% by Year 15, with an implied 1.7x sales-to-invested capital ratio
* 11.2% WACC, based on an industry beta, normalized capital structure and a country risk premium to reflect Reddit’s increasing international exposure
The linked post, provides a detailed overview of the investment thesis, bear case, methodology and assumptions, along with snapshots of the model. We apply Aswath Damodaran's approach for the revenue build, treating stock based compensation, capitalizing research and development, and applying the sustainable growth / reinvestment / ROIC relationship where necessary
I would really appreciate any thoughts or feedback on the analysis
And apologies in advance that the Reddit logo is not well aligned (this annoys me too!)
Thanks all.
