Cantor Fitzgerald has trimmed its price target on Reddit (NYSE: RDDT) to $170.00 from $240.00 and kept a Neutral rating on the stock. The updated target still implies some upside relative to Reddit's most recently quoted share price of $148.40, which has declined 16.21% over the past week.
The brokerage's revision follows Reddit's fourth-quarter financial results, where the company outperformed analyst expectations on both top-line and EBITDA metrics. According to Visible Alpha data cited by Cantor Fitzgerald, Reddit's revenue for the period ran about 9% ahead of consensus, while EBITDA exceeded forecasts by roughly 14%.
Profitability measures reported by the company remain strong. InvestingPro data cited in the firm note points to a gross profit margin of 91.18%, underscoring the company's high-margin revenue mix.
On the revenue-growth front, Reddit reported U.S. revenue expansion of 68% year-over-year, broadly in line with the 67% U.S. growth recorded in the prior quarter. International revenue growth accelerated by four percentage points to 78%. Daily active user, or DAU, growth was steady at 19% year-over-year. Over the trailing twelve months, Reddit delivered 69.4% revenue growth.
For the first-quarter outlook, Reddit guided to up to 54% year-over-year revenue growth at the high end of its range, a figure that Cantor Fitzgerald notes was 7 percentage points above prior street expectations. Management's midpoint for EBITDA guidance implies a year-over-year margin expansion of about 660 basis points, a signal the firm says aligns with consensus forecasts of sustained strong sales growth.
Despite those operational strengths, Cantor Fitzgerald pointed to user growth trajectory as a key reason for its decision to remain neutral. The firm described its view on Reddit's fiscal 2026 fundamentals as constructive, highlighting healthy expansion in core advertising revenues and progress on product initiatives, but said concerns about the pace and sustainability of user gains kept it from adopting a more bullish stance.
The revised $170 target is driven by a reduced valuation approach. Cantor Fitzgerald applied a blended multiple of 20x on FY26E/FY27E EBITDA to arrive at the new target, down from the prior 30x multiple. That change in assumed valuation multiple reflects the brokerage's caution; Reddit's current price-to-earnings ratio is 80.76. InvestingPro analysis cited in the note suggests the stock could be slightly undervalued at current levels, though Cantor Fitzgerald's valuation shift moderates that view.
Reddit's fourth-quarter 2025 operating results were notable for the scale of growth. The company posted revenue of $725.6 million for the quarter, a 70% increase year-over-year, and adjusted EBITDA of $327 million, up 112% from the prior year. Advertising revenue rose 75% year-over-year, and U.S. user growth accelerated by two percentage points, according to the company's reported metrics.
Those results prompted a range of analyst reactions. Needham kept a Buy rating with a $300 price target. Guggenheim raised its target to $255 from $245, citing strong usage metrics and upcoming advertising initiatives. Raymond James reiterated a Strong Buy rating with a $250 target, noting revenue growth that exceeded Street estimates. Citizens maintained a Market Outperform rating and a $300 target, pointing to advertising revenue growth and increased U.S. user growth. Conversely, BofA Securities trimmed its price target to $205 from $210, attributing the change to sector multiple compression despite Reddit's strong performance.
Taken together, the company’s reported operational momentum and the mix of analyst reactions illustrate a gap between solid underlying metrics and lingering valuation and user-growth concerns. Cantor Fitzgerald’s move to lower its valuation multiple and price target reflects that tension: the firm acknowledges robust advertising revenue growth and margin expansion while flagging uncertainty around the trajectory of user engagement as a restraint on upside conviction.