RDDT
Reddit, Inc.
$154.74
High-Growth Software
80%
Revenue × Terminal Margin DCF
Mild
·
Conviction
Overvalued
Trading 1.4% above fair value
You pay
$154.74
Bear
$73.19
Fair
$152.65
Bull
$214.61
Bear
$73.19
-52.7%
18% rev growth, 22% terminal margin
Fair
$152.65
-1.3%
30% rev growth, 30% terminal margin
Bull
$214.61
+38.7%
35% rev growth, 34% terminal margin
Adjust Assumptions
30.0%
30.0%
12.0%
Key Value Driver
Revenue growth (30%) × margin expansion to 30%
Terminal Value % of EV
58%
Implied Market Multiple
12.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (29 analysts)
$202.52
Divergence from AlphaVal
25%
Summary
Projecting 30% revenue growth with FCF margins expanding from 31% to 30% over 10 years, discounted at 12%, the base-case value is $152.65 per share.
Warnings
Gross margin of 91% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep