Reddit initiated with a Sell at Redburn Atlantic

Redburn Atlantic initiated coverage of Reddit (RDDT) with a Sell rating and $75 price target. The firm says Reddit commands a 22-times fiscal 2027 enterprise value to adjusted EBITDA multiple, or 54-times after deducting stock-based compensation expense. While high multiples are not unjustified for fast-growing internet platforms given the size of the online advertising market and the business model’s inherent operating leverage, Reddit’s “significant premium” to Pinterest (PINS) will be increasingly viewed as “far too lofty” as Reddit’s growth rates start to normalize, the analyst tells investors in a research note. Redburn believes that with potential for the stock’s multiple to compress and estimates to be revised down, Reddit shares offer “significant risk to the downside.”