Reddit's stock has surged 40.6% year-to-date. This rally is largely attributed to the company's expanding data licensing deals and deepening partnerships within the AI sector. These new high-margin revenue streams are shifting investor growth expectations.
The rally brings the company's valuation into sharp focus. Reddit currently trades at a Price-to-Earnings (P/E) ratio of approximately 126.6x. This valuation significantly exceeds the Interactive Media and Services industry average of about 16.8x.
Analysts are now examining whether the current stock price fully incorporates the hype surrounding its AI data deals. A Discounted Cash Flow (DCF) analysis suggests a potential undervaluation of around 31.0%. This analysis estimates an intrinsic value of about $338 per share, compared to the current market price. This suggests the long-term cash generation from advertising and data licensing may not be fully priced into the stock.