Author argues Reddit's Q4 2025 net margin is unsustainable because projected Q1 2026 EBITDA falls 30% while revenue only declines 15%, explaining the stock crash.
RDDT — SHORT The author argues Reddit's Q4 2025 net profit margin is not sustainable, citing a Q1 2026 projection where EBITDA falls 30% while revenue declines only 15%. This margin compression is presented as the causal driver behind the stock's crash, implying further downside as profitability normalizes. No explicit price target or timeframe is given beyond the Q1 2026 projection.
Q12026 projection EBITDA is 30% lower than Q42025, but revenue projecting for only 15% decline.
I find this very concerning. It suggests that Reddit’s net profit margin achieved in Q42025 is not sustainable. I believe this is the reason the stock crashed.