Guggenheim recently reiterated its Buy rating on Reddit (NYSE:RDDT), endorsing a price target of $245. The firm’s analysis emphasizes Reddit’s continued efforts to enrich the user experience and prioritize investments with high return potential. Currently trading around $214.54, Reddit's market cap stands at approximately $40.65 billion. Despite InvestingPro data indicating the stock is somewhat overvalued relative to its computed Fair Value, analysts recognize an average potential upside of roughly 17% from existing quotations.
The investment firm drew attention to Reddit's suite of new product trials in progress, which include an enhanced onboarding sequence and a redesigned search interface. These initiatives are expected to bolster momentum in user growth. Guggenheim projects that daily active users (DAUs) will reach 140 million by 2026, a figure that surpasses the market consensus estimate of 133 million.
Leveraging data from SimilarWeb, Guggenheim observed favorable usage trends during the fourth quarter. This includes sustained contributions from third-party search traffic to logged-out daily active users, supporting expectations of robust double-digit growth within this segment. The firm maintains confidence in a total revenue growth rate of 55.5% for the fourth quarter, positioning itself at the higher end of guidance issued by Reddit's management.
Historical financial data corroborates this outlook, with Reddit having achieved a 69.7% increase in revenue over the preceding twelve months. Concurrently, the company reported an impressive gross profit margin of 91.2%, underscoring operational efficiency.
Further refinement in Guggenheim’s projections saw an uplift in the 2026 revenue growth forecast to 41.3% from 39.9%. This adjustment reflects positive feedback from advertiser engagements, which signal that Reddit is evolving into a core element of enterprise advertising strategies. The firm notes this as a pathway toward sustained growth, particularly as the advertising infrastructure matures and scales effectively.
Notably, Guggenheim’s anticipated advertising revenue growth for 2026 stands at 42.8%, ranking at the upper end within its peer group. This forecast is supported by the expectation of both deeper penetration within existing client accounts and expanded uptake by enterprise customers.
In a broader analyst landscape, other firms have recently weighed in on Reddit’s prospects. Evercore ISI has initiated coverage on the stock with an Outperform rating, highlighting Reddit’s robust growth potential. Their projections include a compound annual growth rate (CAGR) for revenue ranging between 30% and 40% over three years, alongside an EBITDA CAGR of 40% to 50%, describing Reddit as possessing one of the strongest growth profiles in its sector.
In contrast, Cantor Fitzgerald commenced coverage with a Neutral rating and assigned a price target of $240, implying a slight downside of about 6% from current trading levels. Despite this tempered viewpoint, Cantor Fitzgerald recognizes Reddit as a dominant digital media platform with over 120 million daily active users.
Complementing these investment perspectives, Reddit has embarked on usability enhancements aimed at increasing platform transparency. The company is piloting verified profiles marked with grey checkmarks, designed to help users identify authenticated individuals and businesses, particularly in relation to official brand communications.
Additionally, Truist Securities has expressed optimism about the Internet and Digital Media sectors through to 2026, explicitly including Reddit. The rationale centers on durable secular growth drivers combined with product enhancements powered by artificial intelligence, which are anticipated to boost competitive positioning and user engagement.
These developments illustrate Reddit’s commitment to expanding its platform capabilities while solidifying its competitive advantages within the digital media ecosystem.