u/thefrogmeister23 ·
Reddit — r/ValueInvesting
· August 01, 2026 at 00:53
· ⬆ 15 pts
· 💬 27 comments
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AI Summary
Summary
Author analyzes RDDT drawdown, arguing Google controls the key search front door and could disintermediate Reddit via AI Overviews.
Thesis: at roughly $24B net cash and ~13x forward earnings, RDDT is reasonably priced and could be an acquisition target for Google.
Suggests Reddit should negotiate product/traffic improvements with Google rather than just selling data for cash.
Quality: Speculative strategic analysis with basic valuation context, not deep due diligence.
Score15
Comments27
Upvote %86%
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The more I think about this, the advantage is in Google's court, but Reddit priced at $24B (net of cash) means it could work quite well for RDDT investors.
Ultimately, Google owns the front door, and they've disintermediated other businesses like this. Reddit's best asset is that so many queries explicitly specify "reddit". But at the end of the day, those users chose to type those queries into Google. If Google can provide a satisfactory answer, the behavior could change.
I think Reddit should move away from getting cash in return for data and ask for product changes that improve the Google experience but also create traffic for Reddit. It would be a win-win. People are asking for human input when they add "reddit" to a query. If Google can improve AI Overviews to give more insight into what's happening on Reddit, highlight relevant threads, and provide ways to follow a thread or even ask a question on Reddit from the overview, it could be net positive for both companies.
Additionally, at 13x forward earnings, Reddit could actually be an easy buy for Google, and then they would own the human input that will be increasingly valuable as AI content becomes more widespread. Reddit is valued at less than Google's FWD PE which means the additional earnings will be additive to Google's stock price.
Any product solutions that you think would work? Do you think a deal is possible?
RDDT is valued around $24B net cash and ~13x forward earnings, while Google holds search/distribution leverage. A strategic deal with Google or a potential acquisition would create upside, while valuation offers some downside support. Cautious long based on valuation and strategic optionality, but structural traffic risk remains. Google AI Overviews reduces “reddit” search traffic; no deal or product partnership materializes; multiple compression.
This Reddit post, published August 01, 2026,
features u/thefrogmeister23
discussing RDDT.
1 trade idea extracted by AI with direction and confidence scoring.