On a wet March morning last year, the famously orange “Snoo” alien finally landed on Wall Street and within hours, Reddit (NASDAQ: RDDT) proved it could turn memes into money.
A directed‑share program let thousands of volunteer moderators and power users buy stock on day one without the usual lock‑up, an IPO twist no big social network had tried before.
Fifteen months later, the market is still trying to pin down what exactly it bought. Reddit closed just north of $130 per share, giving the platform a $23 billion market cap, or roughly what Snapchat fetched in 2017, but on less than one‑tenth the head‑count.
So, where might the shares sit by mid‑2030? Will it stall or stun investors?
Revenue Mix Wall Street Didn’t See Coming
The ad business is humming as evidenced by Reddit’s Q1 2025 revenue climbed by 61 % year over year to $392 million, powered by brisk ad growth and a gross margin north of 90 %.
That margin rivals software‑as‑a‑service titans and hints at serious operating leverage once the company scales past today’s 108 million daily active uniques.
Licensing data to Big AI is turning into a real business and we can see that in a headline‑grabbing $60 million‑a‑year deal with Google kicked off a revenue stream that already accounts for about 10 % of total sales.
Because licensing carries minimal incremental cost, each new contract drops almost dollar‑for‑dollar to the bottom line. The catch is that regulators are circling. In particular, the FTC has warned that it’s looking hard at whether selling user posts to train models is fair play.
Another revenue angle is Reddit’s Polygon‑based NFTs that have generated no more than $3 million of primary revenue in two years, yet the secondary market has clocked roughly $40 million in trading volume, seeding a royalty stream that could matter if digital identity gains traction again.
Moats Most Investors Overlook
Millions of free workers offer Reddit a moat most overlook. Northwestern researchers calculate that volunteer moderators perform at least $3.4 million of unpaid labor every year keeping subreddits civil. Even if that’s an underestimate (many analysts believe it is), it’s an expense line Reddit’s rivals simply don’t get to erase.
Reddit also enjoys an SEO fortress hiding in plain sight. Reddit posts now rank for more than 5.7 million transactional keywords on Google, a footprint larger than many Fortune 500 e‑commerce sites. Every top‑of‑funnel click is a potential ad impression, marketplace referral, or data point to sell downstream.
Add to these the user base that buys in every sense. Remember that no‑lock‑up IPO program? Those early retail holders are also super‑users, giving Reddit an unusually aligned shareholder community that evangelizes the product daily on the site itself.
Building a 2030 Income Statement (Three Scenarios)
| Bear Case | Base Case | Bull Case | |
|---|---|---|---|
| 2025 Revenue (est.) | $1.7 B | $1.7 B | $1.7 B |
| 5‑yr CAGR | 15 % | 25 % | 35 % |
| 2030 Revenue | $3.4 B | $5.2 B | $7.7 B |
| Target P/S | 5× | 8× | 10× |
| Implied 2030 Mkt. Cap | $17 B | $42 B | $77 B |
| Upside vs. Today | ‑27 % | +78 % | +230 % |
If licensing stays ~10 % of sales, gross margin drifts down to 85 % as content‑moderation costs rise, and share count grows 2 % annually these numbers are probably quite reasonable.
Even the conservative path leaves Reddit only modestly below today’s valuation, thanks to ultra‑high margins. The middle road suggests almost 80 % upside, while a bull run, if AI licensing and commerce both hit, more than triples the share price.
So What Are The Gotchas?
The big insider lock‑up expired back in September 2024, but another tranche of employee RSUs unlocks each quarter. A weak advertising report has the potential to spark selling pressure.
Another issue is ad-dollar cannibalization. For sure Reddit’s brand‑safe ad platform is improving, but it competes against TikTok and YouTube for the same budget line. Consumer slowdown will domino to an ad slowdown that in turn will ding the growth model faster than it hits a subscription‑based rival.
To top if off there are regulatory concerns because if Washington or Brussels decide user posts are “personal data” that can’t be resold, Reddit’s AI licensing goose gets cooked.
The Wild Cards to Watch
Reddit rehired e‑commerce staff this spring. Picture every “What’s the best budget laptop?” thread with a buy button, and a revenue‑sharing deal that sidelines affiliate middlemen.
Keep an eye on video everywhere, for example, Reddit’s new short‑form video tools ride the subreddits you already visit. Early tests show time‑on‑site lift of 14 %. If even half the DAUq adopts TikTok‑style scrolls, ad inventory explodes.
And then there are open‑source AI assistants. Ironically, by selling data to developers Reddit could spawn better third‑party bots that keep users engaged inside threads, not siphoned off to external chat apps.
Where Will Reddit Stock Be In 5 Years?
Wall Street’s current 12‑month price target sits near $148 per share, higher than today, but still hedged. Stretch the lens to five years and the math favors patient bulls because management merely needs to maintain its present growth cadence. The model points to a $40‑plus billion valuation, good for a mid‑double‑digit annual return.
That isn’t meme‑stock territory, but it beats the historical S&P 500 and it’s built on revenue streams most investors still treat as “experimental.” The irony won’t be lost on long-time followers because a site famous for crowdsourcing stock tips may be transforming into one of the market’s more asymmetric long‑term bets.
With Reddit scaling its ad engine, and then double‑dipping on AI licensing, and converting its SEO windfall into commerce dollars, today’s price looks like an intriguing on‑ramp.
With that regulators, insider unlocks, or social‑media fatigue offer reasons to be worried and plenty of other tech names offer cleaner stories. Just remember that while five years is a long time on the Internet, Reddit has already survived 20. That alone might be the most unusual fact of all.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
