u/run_midnight 5.0 3 ideas

Reddit’s US DAUq grew 1.57% per quarter in 2025, international 5.0%; US ARPU grew 30% quarterly, international 20.3%. Author extrapolates these rates to 2030, capping ARPU at 10% of Meta’s. If Reddit sustains user growth and ad monetization improves toward Meta’s levels, revenue could rise from ~$5.4B (2026E) to ~$14.3B (2030E), yielding net income of ~$12B. Long-term buy-and-hold on RDDT based on compounding user engagement and ARPU expansion potential. Linear extrapolation ignores competition, ad market saturation, regulatory changes, and the assumption that RDDT can achieve Meta-like monetization. P/E of 60 may be unrealistic.

Revenue grew ~20% QoQ on average in 2025; Q1 2026 guide implies 53% YoY growth; author extrapolates 47% full-year 2026 revenue growth and 76% EBITDA growth. If actual results track the extrapolation, RDDT becomes fundamentally stronger, supporting a multiple expansion or sustained higher valuation, creating upside for long-dated calls/LEAPS. Buy long-dated calls/LEAPS to capture multi-year growth trajectory, as implied by the community’s TLDR summary and author’s explicit “diamond hand to 2030” stance. Growth deceleration (as noted in top comment – Facebook/Twitter compressions), higher-than-expected expenses (infrastructure, headcount), user monetization saturation, and potential macro headwinds.

Reddit's primary revenue (90%+) is from ads, growing 75% YoY in Q4 2025, with a forecasted 40%+ growth rate. Analysts project high profitability (40%+ EBITDA margins) and have price targets up to $320. The market is undervaluing RDDT's scalable ad business and the impact of its $1B share repurchase plan. Applying a 40% growth rate to net income and the buyback suggests significant upside. Strong ad growth, analyst confidence, and capital return via buybacks support a long position with the potential for the stock to double. Ad growth slows below 40%; AI data licensing revenue (a minor but highlighted segment) declines as predicted; high PE multiple (62) contracts if growth disappoints.