Reddit Analyst Lowers Price Target to $240 Despite Record Q4 Profitability and $1B Buyback

Following strong Q4 2025 results, an analyst maintained a "BUY" rating on Reddit. The analyst lowered the DCF target price to $240, down from $280.

Reddit reported $726 million in revenue, a 70% year-over-year increase. PATMI jumped 255% to $252 million. A 75% growth in ad revenue drove these results.

The updated valuation reflects a rollover to FY26 estimates and moderation of the terminal growth rate.

The analyst forecasts 66% YoY ad revenue growth, fueled by new campaign features. However, the analyst reduced "other" revenue growth expectations from 55% to 35%. This reduction anticipates softer data-licensing deals.