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@yum

yum

Joined 3/30/2026 · EN

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EN · 3/30/2026, 7:47:44 AM
RDDT: The Front Page of The Internet Why I'm Not In I missed the IPO at $34 — thought it was overpriced for a company that hadn't turned a profit in 20 years. The stock is now ~$233, up 640% since listing. I owned a small position around $115 but sold in March 2025. Reddit is now on my 2026 watchlist. The Bull Case Q3 2025: $585M revenue (+68% YoY), 116M DAUq (+19%), $163M net income, 40% adjusted EBITDA margins. Reddit's edge is intent. Users don't scroll passively — they arrive with specific questions. That creates commercial context at scale that advertisers pay a premium for. Twenty years of authentic, peer-moderated conversations across 100,000+ communities can't be manufactured or bought. Monetisation Advertising hit $549M in Q3 (+74% YoY), driven by native conversation ads, programmatic buying, and better targeting. Gross margins expanded to 91% — pure operating leverage. Data licensing ($36M, +7% YoY) is early but high-margin. The international ARPU gap is the biggest opportunity: U.S. ARPU is $9.04 vs. $1.84 internationally. That 5x gap is the entire multi-year thesis. Valuation At $233/share ($44B market cap), Reddit trades at 20.6x 2025 revenue. Bear case: International ARPU stalls at $2.50, U.S. growth decelerates to 15% → $28.8B value → 35% downside, ~$152/share Base case: International ARPU reaches $4.50 by 2028, U.S. sustains 25% growth → $55.5B value → 26% upside, ~8% annualised Bull case: International ARPU hits $6.00, U.S. expands into video/commerce → $115B value → 161% upside, ~38% annualised The market at $233 is pricing in base-case execution with some bull-case probability. The easy money has been made. Key Metrics to Watch Every Quarter International ARPU — needs to reach $2.50+ by Q2 2026 or the thesis breaks U.S. DAUq growth — currently only 7% YoY while revenue grows 68%; that gap must narrow gracefully Logged-out user sustainability — 57% of DAUq are logged-out, Google-dependent users Reddit doesn't control Revenue vs. user growth differential — when this gap falls below 15 points, the stock reraters lower Risks Advertiser concentration in tech/gaming. User experience degradation from over-monetisation. Platform dependency on Google's algorithm. International execution complexity. AI chatbots reducing the need to search Reddit at all. Verdict Reddit owns an irreplaceable moat. The business is genuinely impressive. But at $233 it's priced for near-perfect execution — 35% downside in the bear case for 161% upside in the bull. That's decent risk/reward, not exceptional. A pullback to $190–210 improves it meaningfully. I'd get genuinely excited around $150.

Posts

EN · 3/30/2026, 7:47:44 AM

RDDT: The Front Page of The Internet Why I'm Not In I missed the IPO at $34 — thought it was overpriced for a company that hadn't turned a profit in 20 years. The stock is now ~$233, up 640% since listing. I owned a small position around $115 but sold in March 2025. Reddit is now on my 2026 watchlist. The Bull Case Q3 2025: $585M revenue (+68% YoY), 116M DAUq (+19%), $163M net income, 40% adjusted EBITDA margins. Reddit's edge is intent. Users don't scroll passively — they arrive with specific questions. That creates commercial context at scale that advertisers pay a premium for. Twenty years of authentic, peer-moderated conversations across 100,000+ communities can't be manufactured or bought. Monetisation Advertising hit $549M in Q3 (+74% YoY), driven by native conversation ads, programmatic buying, and better targeting. Gross margins expanded to 91% — pure operating leverage. Data licensing ($36M, +7% YoY) is early but high-margin. The international ARPU gap is the biggest opportunity: U.S. ARPU is $9.04 vs. $1.84 internationally. That 5x gap is the entire multi-year thesis. Valuation At $233/share ($44B market cap), Reddit trades at 20.6x 2025 revenue. Bear case: International ARPU stalls at $2.50, U.S. growth decelerates to 15% → $28.8B value → 35% downside, ~$152/share Base case: International ARPU reaches $4.50 by 2028, U.S. sustains 25% growth → $55.5B value → 26% upside, ~8% annualised Bull case: International ARPU hits $6.00, U.S. expands into video/commerce → $115B value → 161% upside, ~38% annualised The market at $233 is pricing in base-case execution with some bull-case probability. The easy money has been made. Key Metrics to Watch Every Quarter International ARPU — needs to reach $2.50+ by Q2 2026 or the thesis breaks U.S. DAUq growth — currently only 7% YoY while revenue grows 68%; that gap must narrow gracefully Logged-out user sustainability — 57% of DAUq are logged-out, Google-dependent users Reddit doesn't control Revenue vs. user growth differential — when this gap falls below 15 points, the stock reraters lower Risks Advertiser concentration in tech/gaming. User experience degradation from over-monetisation. Platform dependency on Google's algorithm. International execution complexity. AI chatbots reducing the need to search Reddit at all. Verdict Reddit owns an irreplaceable moat. The business is genuinely impressive. But at $233 it's priced for near-perfect execution — 35% downside in the bear case for 161% upside in the bull. That's decent risk/reward, not exceptional. A pullback to $190–210 improves it meaningfully. I'd get genuinely excited around $150.