Bank of America has held its view on Reddit (RDDT) at Neutral even after the social media company's shares have weakened year-to-date. In an updated note, analyst Justin Post reduced his price target for RDDT to $175 from a prior target of $205, and moved to an EBITDA-based valuation to better reflect what the bank sees as a more mature margin profile.
Post's valuation metrics show Reddit trading at about 6.2 times estimated 2027 revenue and about 14 times estimated 2027 EBITDA, with both multiples sitting well above the peer medians the bank cites - 3.5 times for revenue and 9 times for EBITDA. Those relative premiums inform BofA's cautious stance despite acknowledging several potential growth levers.
Positives highlighted by BofA include:
- a meaningful monetization gap versus comparable platforms, suggesting room for revenue expansion;
- potential revenue upside from data partnership agreements and search advertising;
- Reddit's role as a structural input for AI models, which BofA believes could support stronger AI licensing terms in 2027.
At the same time, the bank flagged material risks that temper its outlook. BofA points to slowing growth in logged-in users, a heavy dependence on Google for referral traffic, and intensifying competition from generative AI services such as ChatGPT, Gemini and Claude.
"Given discretionary nature of online advertising spend, higher expected Reddit growth rates vs the sector, and a premium valuation to peers, we see Reddit as one of the most macro sensitive stocks in our coverage group," Post wrote.
BofA also noted that Reddit would likely be "an outsized beneficiary of any ME conflict resolution," but said the combination of uncertainty and the stock's premium multiples supports maintaining a Neutral rating for now.
For investors seeking valuation context, a fair value calculator that applies multiple valuation models can be used to assess whether the current market price reflects RDDT's longer-term revenue and earnings potential. Such tools typically blend a range of industry valuation approaches to produce a consolidated view of implied value.
Summary
Bank of America lowered its RDDT price target to $175 and shifted to an EBITDA valuation, citing premium multiples versus peers and macro sensitivity as reasons to remain Neutral, while acknowledging monetization and AI licensing as key upside drivers.