§ 04What WACC means for valuation

A WACC isn't an input you can negotiate — but the swing across plausible WACC values produces materially different price targets. Below: Reddit's DCF-implied per-share value at varying discount rates.

DCF · per-share value at WACC

WACC	PV explicit (5Y)	PV terminal	EV	Per share
10.0%	$3.5B	$48.0B	$51.5B	$285
11.0%	$3.4B	$38.6B	$42.0B	$233
12.05% (base)	$3.3B	$31.7B	$35.0B	$194
13.0%	$3.2B	$26.4B	$29.6B	$164
14.0%	$3.1B	$21.9B	$25.0B	$139
15.0%	$3.0B	$18.3B	$21.3B	$118

Reading the DCF sensitivity

A 200bps WACC change (12% → 14%) shaves ~28% off the implied per-share value. For an all-equity firm with terminal value >90% of EV, this is amplified — there's no debt cash flow stream to dilute the terminal sensitivity.

The cited base case ($194/sh at 12.05%) sits roughly +6% above the current $182 trading price — but the band from $118 to $285 across reasonable WACC values is wider than most investors will admit.

Assumes 18% revenue CAGR through Year 5, 2.5% terminal growth, terminal EBITDA margin 35%. Illustrative only.