Reddit stock price target lowered to $205 by BofA on sector multiple compression

BofA Securities analysts reduced their price target for Reddit (NYSE:RDDT) from $210 to $205 on February 6, 2026, due to broader multiple compression currently impacting the online media sector. Despite maintaining a Neutral rating, the financial institution adjusted its valuation to reflect a lower revenue multiple of 9.5x, down from 10x, even as the company continues to display robust fundamental growth. This revision follows a period of market volatility for the social media platform, which is currently trading significantly below its 52-week high of $282.95. The adjustment comes immediately after Reddit reported a stellar fourth-quarter performance that surpassed Wall Street expectations across several key metrics. The company posted revenue of $726 million and EBITDA of $327 million, beating analyst estimates of $668 million and $288 million, respectively. A significant driver of this growth was a 75% year-over-year surge in advertising revenue. Furthermore, Reddit demonstrated high operational efficiency with gross profit margins reaching 91.21%, while daily active users climbed to 121.4 million, exceeding the projected 119.9 million. Looking ahead, Bank of America remains optimistic about Reddit's internal scale, raising its 2026 revenue estimate by 4% to $3.1 billion and its EBITDA forecast to $1.3 billion. Analysts noted that while the price target was lowered, Reddit still commands a valuation premium compared to its peers because of its superior revenue growth and margins. Other major firms including Morgan Stanley and Goldman Sachs have also recently updated their outlooks, with Morgan Stanley maintaining an Overweight rating despite lowering their target to $240, citing the company's strong top-end guidance for the first quarter of 2026.