Needham Reiterates Buy and $300 Target
Needham has kept its Buy rating and a $300.00 price target on Reddit (NYSE: RDDT) after the social platform published its fourth-quarter 2025 financial results. The price objective implies roughly a 99% upside from the stock's then-prevailing price of $151.05, with InvestingPro data indicating the shares were trading below their Fair Value.
Quarterly results and key metrics
Reddit reported revenue of $725.6 million for the quarter, a 70% increase year-over-year and 9% ahead of Needham's projection. Adjusted EBITDA rose to $327 million, up 112% from the prior year and 16% above the firm's estimate. On a per-share basis, non-GAAP earnings were $1.72, a 99% year-over-year gain and 18% higher than Needham expected.
The company attributed the strong top-line to advertising, where revenue climbed 75% year-over-year in the fourth quarter. Average revenue per user increased 44% year-over-year, while the user base expanded 18% from the same period a year earlier. Reddit has now sustained revenue growth above 60% for six consecutive quarters.
Needham's rationale and strategic outlook
In its note, Needham highlighted Reddit's strategic advantage in human-created content, the company's execution that has driven rapid margin expansion, and the potential for revenue streams tied to large language model licensing. Those factors led the firm to designate Reddit as its top stock pick for 2026.
Other analyst moves following the quarter
Following the earnings release, several other brokerages updated their views or price targets for Reddit. Guggenheim raised its target to $255 while retaining a Buy rating. Raymond James reiterated a Strong Buy rating with a $250 target. Citizens maintained its Market Outperform rating with a $300 target. By contrast, BofA Securities trimmed its price target to $205, citing sector multiple compression despite Reddit's results. Morgan Stanley adjusted its target to $240 while keeping an Overweight rating.
Note: Another reference to the company's headline revenue in recent coverage rounded the quarterly top line to $726 million and likewise cited adjusted EBITDA of $327 million as topping analyst expectations of $288 million.
Summary
Needham sustained its Buy rating and $300 price target on Reddit after the company posted strong Q4 2025 results, with revenue and adjusted EBITDA materially beating estimates. Robust advertising growth, improving monetization metrics and margin expansion underpin Needham's bullish stance, even as other analysts issued divergent price-target updates.
- Key points
- Reddit reported Q4 revenue of $725.6 million, up 70% year-over-year, and adjusted EBITDA of $327 million, up 112% year-over-year.
- Advertising revenue grew 75% year-over-year; ARPU rose 44% and user growth was 18% year-over-year.
- Analysts' price targets vary: Needham and Citizens at $300, Guggenheim $255, Raymond James $250, Morgan Stanley $240, and BofA at $205.
- Risks and uncertainties
- Valuation divergence across sell-side firms presents uncertainty for equity investors, affecting the technology and media sectors' sentiment.
- Sector multiple compression, cited by BofA, may pressure stock valuations even with strong underlying performance, impacting broader market and internet-advertising sector investors.
The information above is based on published quarterly results and subsequent analyst notes. Where coverage referenced the quarter, one line item was rounded to $726 million in alternative reporting; adjusted EBITDA was consistently reported at $327 million and materially beat the cited Street expectation of $288 million.