Analyst Flips Bullish on Reddit Stock After 50% Drop
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- Reddit stock has dropped roughly 50% from its September 2025 peak, though it remains up nearly 300% since its March 2024 IPO debut.
- Reddit's price-to-sales ratio fell from 29 at its peak to just 12, while its forward P/E sits at 20 against a trailing P/E of 51, per the analyst's valuation read.
- Reddit reported $2.2 billion in 2025 revenue, up 69% year-over-year, and swung to a $530 million profit from a $484 million loss in 2024.
- Reddit ended 2025 with more than 121 million daily active users across over 100,000 communities, and the analyst highlights that Reddit forums are the No. 1 source cited in AI-driven search answers.
- Analysts project 43% revenue growth for Reddit in 2026, slowing to 30% in 2027, per consensus estimates cited in the piece.
- The analyst recommends dollar-cost averaging into the stock rather than a lump-sum purchase, citing residual market volatility and noting the valuation is attractive but not yet at rock bottom.
Why it matters: Reddit's P/S ratio collapsed from 29 to 12 alongside the 50% stock drop, while 2025 revenue grew 69% to $2.2B and the company swung to a $530M profit from a $484M loss. The valuation-growth mismatch that spooked this analyst last fall has materially compressed, shifting the risk/reward for growth investors.
