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