What Are Reddit Investors Betting On

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Reddit (RDDT) stock trades at 26.5 times its adjusted earnings over the twelve months to June 30, 2026. This profit figure adds stock-based compensation, after tax, back to normalized net income. That is a high price for a single year of profit, and on analyst forecasts the multiple falls to 22.3 times by fiscal 2027. So what growth are buyers of Reddit stock counting on?

Reddit Investors Are Betting On Fast Sales Growth

Anyone buying at today's price is betting that Reddit will maintain rapid sales growth through fiscal 2027. The consensus forecast puts sales at $3.39 billion in fiscal 2026. For fiscal 2027, projections show sales rising another 32.5% while net income grows 22.8%, narrowing the forecast net margin to 29.9% from 32.3%.

On those forecasts, Reddit stock at $155.65 trades at 27.4 times fiscal 2026 earnings. Against the forecast for fiscal 2027, it trades at 22.3 times. Because the trailing 26.5 times figure adds stock-based compensation back into profit and the forecasts may not, the two metrics do not compare cleanly.

Reddit Has Been Growing Faster Than The Forecast

Reddit grew sales 66.6% over the twelve months to June 30, 2026, easily outpacing the consensus forecast for fiscal 2027. Advertising accounts for most of the business. Ad revenue hit $762 million in fiscal Q2 2026, up 64% from a year earlier. During the fiscal Q2 2026 call, management said that growth came from both pricing and impressions, and that active advertisers grew over 70%.

That growth is slowing, however. Sales grew 61.1% in fiscal Q2 2026, and management expects 47% to 49% growth in fiscal Q3 2026.

Where Could Reddit's Forecast Go Wrong?

The consensus forecast for fiscal 2027 is uncertain: the gap between the highest and lowest estimates of earnings per share equals 61.1% of the average forecast. The margin is one soft spot. Projections anticipate a 32.3% net margin in fiscal 2026. Reddit reported a 31.3% net margin over the twelve months to June 30, 2026, close to the forecast, though the forecast may not be on the same basis. If the margin slips back, the profit forecast for both years would come down.

Sales could also fall short if search traffic weakens. Management said on the fiscal Q2 2026 call that search referrals were choppy in the quarter, and that Reddit's visibility on search remains low and is likely to stay volatile. Fewer visitors from search could mean fewer ad impressions, one of the two sources of growth management named, and the sales forecast would then come down.

If Reddit delivers the forecast, the price on its fiscal 2027 profit is a fair picture of what you pay for the stock. A shortfall in either sales or the margin would make Reddit stock a riskier bet, priced for profit it has not yet earned. Expected on or around October 29, 2026, sales growth in the fiscal Q3 2026 report is the measure to watch.

Does This Mean You Should Act On RDDT?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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