Asymmetrical Bets
· Asymmetrical Bets
· July 30, 2026 at 14:13
· ⏱ 3 min read
| Read on Substack ↗
Summary
Reddit faces a binary earnings event: strong operational metrics (69% revenue growth, 40%+ EBITDA margin, $311M FCF) are offset by a demanding valuation (~40x forward earnings) and 12% short interest. The stock must deliver upside to justify its current price, making today's print a critical catalyst for the non-AI, high-growth narrative.
•Reddit trades at ~40x NTM forward earnings and ~37x calendar 2026 estimates, with 12% short interest.
•Last quarter (Q1) revenue was $663M (+69% YoY), ad revenue $625M (+74%), and EPS beat estimates by $0.43 ($1.01 vs $0.58).
•Adjusted EBITDA margin crossed 40% for the first time, up ~1,100 bps YoY; FCF was $311M on just $1M capex.
•Global DAUq grew 17% to 126.8M, but US logged-in daily users grew only 1%; the goal is 100M US daily users from ~54M.
•ARPU surged: global ARPU up 44% to $5.23, international ARPU up 51% to $2.02; management noted ad impression value is similar for logged-out users.
•The stock ran from $136 to $203 on data repricing thesis, dropped 8% on WSJ story about the Google contract, and now sits at $184.