$RDDT get in before earnings

MrActionJack · 2026-04-27T15:31:47+00:00

=== SUMMARY === - Post presents a bullish thesis on Reddit (RDDT) ahead of earnings, highlighting strong revenue growth, expanding EBITDA margins, and AI licensing revenue renegotiations. - Author argues the bear case (Google AI Overviews reducing search traffic) is overdone, citing ARPU growth and international monetization runway. - Quality is well-researched DD with specific financials, valuation comps, and a personal long position disclosed. === SENTIMENT === BULLISH === TRADE IDEAS === TICKER - DIRECTION | confidence: 0.90 | sentiment: +0.85 Speaker: u/MrActionJack Thesis: 1. THE FACT: Q4 25 revenue $725M (+70% YoY), 45% adjusted EBITDA margin, $2.5B cash, $1B buyback authorized. Gross margin 91.9%. 2. THE BRIDGE: On a growth‑adjusted basis (EV/EBITDA vs revenue growth), Reddit at 32x growing 70% is cheaper than Meta at 22x growing 17%. 3. THE VERDICT: Long‑term buy‑and‑hold; current $27B EV could reach $44B+ if 2027E revenue of $4B at 50% margin is achieved. 4. RISKS: US DAU growth deceleration (9% YoY vs 32% prior), dependence on Google search (68% of traffic), AI Overviews impact, forward P/E ~38x. Timeframe: long‑term Key Points: - Revenue +70% YoY, EBITDA margin leaped from 4% to 45% - AI licensing deals repricing to dynamic per‑citation model - US ARPU $10.79, international $2.31 – monetization runway - Growth‑adjusted valuation cheaper than Meta - Author held through $250, expects 60% upside === COMMENTS SUMMARY === Community sentiment is bullish overall. Top comment (u/b0men) confirms heavy bags in RDDT and adds that Reddit’s conversational data is uniquely valuable for AI training. Another user (u/Cagliari77) sold at $250 and bought back at $140, suggesting a tactical trade approach. The TLDR comment reinforces the long thesis and mocks the “mods work for free” business model. No strong counter‑arguments are presented; the only caution is from the bear case in the post itself (DAU slowdown).

AI Summary

Summary

Post presents a bullish thesis on Reddit (RDDT) ahead of earnings, highlighting strong revenue growth, expanding EBITDA margins, and AI licensing revenue renegotiations.
Author argues the bear case (Google AI Overviews reducing search traffic) is overdone, citing ARPU growth and international monetization runway.
Quality is well-researched DD with specific financials, valuation comps, and a personal long position disclosed.

Score 55

Comments 42

Upvote % 89%

▶ Full Post Text

**Bull Case:**

Q4 25 - $725M revenue (+70% YoY). 45% adjusted EBITDA margin. $267M operating cash flow. $2.5B in the bank. Authorized a $1B buyback the same day.

Add revenue growth + EBITDA margin and you get 115%. The benchmark for a healthy SaaS company is 40%. NVDA is around 90% right now. Meta is around 60%.

Gross margin is 91.9%. Reddit pays nothing for content, mods work for free, and the only real costs are servers and trust &amp; safety. EBITDA margin went from 4% to 45% in 24 months.

On top of the ad business there's the AI licensing line. Google pays them $60M/yr and OpenAI pays $70M/yr to train models on Reddit data, \~10% of total revenue. Anthropic tried to scrape it without paying and got sued. Reddit is renegotiating these deals to dynamic pricing (pay per citation in AI answers) which could reprice the line meaningfully.

**Bear Case:**

US DAU grew 9% YoY in Q4. A year ago it grew 32%. The fear is Google's AI Overviews answer queries directly and 68% of Reddit's traffic comes from Google search, so the funnel dies. Stock got nuked on this thesis in early 2026.

I think it's overdone. ARPU is doing the work, not user count. Global ARPU went $2.94 to $5.98 in 24 months. US ARPU is $10.79, international $2.31. Even if US user count flatlines for a year there's years of monetization runway internationally.

**Valuation:**

Trailing P/E is 59 - ignore it, the IPO comp charges are still flowing through GAAP. Forward P/E is 38. EV/Adj EBITDA is 32x.

Meta trades at 22x EV/EBITDA growing 17%. Reddit at 32x growing 70%. On a growth-adjusted basis Reddit is cheaper.

Napkin: $4B revenue in 2027 at 50% margin = $2B EBITDA. At Meta's multiple that's a $44B EV. Today they're at $27B. \~60% if it works.

**My position:**

I am a long term buy and hold. Didn't sell when it broke $250. Hope this post ages well after Thurs!

https://preview.redd.it/hmiyhwxd6rxg1.png?width=1630&amp;format=png&amp;auto=webp&amp;s=7b95ff4462fecd354cf03770c4749f6545f5e798

https://preview.redd.it/wqbe1efe6rxg1.png?width=1099&amp;format=png&amp;auto=webp&amp;s=eec413ce6fbd501124c608f73c2e905a0cd772f0

https://preview.redd.it/dg0814oe6rxg1.png?width=1140&amp;format=png&amp;auto=webp&amp;s=8b37ad27b74495711583a8a57695f302bde0dfdb

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