muji | March 2026
I am a technologist who invests. And when I look at Reddit through my platform lens, I see something that checks almost every box in my framework:
Here's the thing... Reddit is the anti-AI content platform. In a world drowning in LLM-generated slop, authentic human discussion is becoming more valuable, not less. Google literally appends "site:reddit.com" to search results because Reddit is where the real answers live. The "most human place on the internet" isn't marketing — it's a competitive moat.
Revenue trajectory (FY25):
Q1 FY25: $392m ████████████████
Q2 FY25: $500m ████████████████████
Q3 FY25: $585m ████████████████████████
Q4 FY25: $726m ██████████████████████████████+61% → +78% → +68% → +70% YoY — that's sustained 60-78% growth for 4 straight quarters !!
Full year $2.2B. Up from $1.3B in FY24. First time profitable — $530M net income.
ARPU trajectory — this is where the magic is:
| Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Trend |
|---|---|---|---|---|---|
| US ARPU (DAUq) | $4.09 | $7.87 | $9.04 | $10.79 | +164% YoY ^^ |
| Intl ARPU (DAUq) | $3.06 | $1.73 | $1.84 | $2.31 | Still early |
| Blended ARPU (DAUq) | $3.63 | $4.53 | $5.04 | $5.98 | +42% YoY |
NUANCE: US ARPU went from $3.88 (Q1 FY24) to 10.79(Q4FY25)—that′sa * *2.8xincreaseinundertwoyears. * *AndRDDT′sUSARPUisstillafractionofMeta(17+), Snap (12+), andPinterest(11+). The ARPU gap to mature social platforms is the single biggest alpha signal in this investment. This isn't about hoping for growth — the gap quantifies the runway.
International ARPU at $2.31 vs US at $10.79 = 4.7x gap. International DAU growing +28% YoY (68.9M). That's a multi-year monetization runway that doesn't require user growth to accelerate — just better ad products for non-US markets.
Margin trajectory:
| Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Trend |
|---|---|---|---|---|---|
| Gross Margin | 90.5% | 90.8% | 91.0% | 91.9% | !! |
| EBITDA Margin | 29% | 33% | 40% | 45% | ^^ !!! |
| Net Margin | 7% | 18% | 28% | 35% | ^^ !!! |
| FCF Margin | 32% | 22% | 31% | 36% | ^^ |
92% gross margins. 45% EBITDA margin. 36% FCF margin. ALL in the same quarter. For a company growing 70% YoY.
Rule of 40 check: 70% growth + 45% EBITDA = Rule of 115 !!!
I don't throw triple-bangs around lightly. This is extraordinary.
This is the product catalyst that the market is underweighting IMHO.
Reddit Max (AI-powered automated campaigns):
Why this matters for the platform thesis: Reddit Max is the self-serve GTM play. It lets SMBs who have zero Reddit expertise run effective campaigns. That's how you go from 375K active advertisers to millions. Meta didn't become Meta because brands figured out Facebook Ads — it became Meta because the self-serve tools made it possible for a pizza shop in Ohio to run campaigns.
Lower-funnel traction:
DING DING DING. When your advertiser count grows faster than your revenue, you're in the early innings of monetization. Each new advertiser starts small and scales up over time. The existing advertisers are increasing spend. This is the double flywheel.
Other revenue (data licensing to Google, OpenAI, etc.) is running at ~36M/quarter(144M annualized). The original Google deal was 60M/year, OpenAI 70M/year. Together ~$130M baseline, heading toward $400M by 2027 per analyst estimates.
NUANCE: Reddit is exploring dynamic pricing models where the platform gets paid more as AI answers become more dependent on Reddit content. This is the "building block" thesis at work — Reddit's data is embedded in LLM training and inference. As those models scale, Reddit's data becomes more valuable, not less. The pricing power accrues to the content source.
That said — data licensing is +7-8% YoY vs +70%+ for ad revenue. It's a nice option but it's NOT the thesis. The thesis is the ad platform.
The stock has pulled back significantly — from 283peak(Sep2025)to 132 today. That's a 53% drawdown. Market cap ~$25-27B.
At current prices:
For context: Meta trades at 9x forward revenue growing 20%. Snap trades at 4x forward revenue growing 15%. Pinterest trades at 7x forward revenue growing 18%.
RDDT is growing 3-4x faster than these peers with better margins and trading at comparable multiples. That's the market pricing in deceleration that hasn't happened yet.
Google search dependency — structural. Reddit gets significant traffic from Google. If Google changes algo or AI Overviews reduce click-through, RDDT is exposed. Partial mitigation: Reddit Answers product + direct app engagement growing.
Q1 FY26 seasonal deceleration — guided $595-605M (+54% YoY). This is a sequential decline from Q4's $726M. Seasonal — Q4 always biggest for ad companies. But the market will freak out about "deceleration from 70% to 54%." It shouldn't. Q1 is always the trough.
AI content risk — if Reddit gets overrun by bot/AI-generated content, the "human authenticity" moat erodes. Reddit's moderation infrastructure (community-driven) is a defense, but not bulletproof.
SBC — still "high teens" percent of revenue. At 2.4BFY26revenuethat′s 400M+ in SBC. Not disqualifying but dilution is real.
International ARPU — at $2.31, needs to show upward trajectory above $3.00 to confirm the monetization thesis outside the US.
Revenue growth: +70% YoY → Tier 1 ✓ Margins: 92% GM, 45% EBITDA, 36% FCF → Tier 1 ✓ Platform: Crowdsourced intelligence, self-serve GTM, network effects, building block → Tier 1 ✓ Rule of 40: Rule of 115 → Tier 1 ✓ Product cadence: Reddit Max, Reddit Answers, DPA, multi-language expansion → Tier 1 ✓
Tier: 1. No question. This is a Tier 1 growth compounder.
At ~$132/share (down 53% from highs), I'd argue this is one of the better risk/reward setups in the Tier 1 universe right now. You're getting a Rule of 115 company at 8.5x forward revenue because the market is pricing in deceleration to ~50% that hasn't happened yet — and even if it does, 50% growth + 45% EBITDA margin = Rule of 95. Still elite.
Thesis: INTACT — STRENGTHENING
RDDT is a textbook platform company in my framework. Crowdsourced intelligence moat that strengthens with AI proliferation (more demand for authentic human content). Self-serve ad platform inflecting from brand to performance. ARPU gap to peers provides multi-year revenue growth runway without requiring user growth acceleration. International monetization barely started. Margins expanding toward best-in-class. Capital allocation improving ($1B buyback, zero debt, $2.5B cash).
The 53% drawdown from peak creates a compelling entry. This is a company I'd be adding to at these levels — moving from 4.6% toward 6-7% allocation over the next quarter, particularly if Q1 FY26 confirms the seasonal pattern and the market overreacts to "deceleration."
Key catalyst to watch: Reddit Max GA timing and adoption metrics. If self-serve onboarding drives active advertiser count from 375K toward 500K+ in FY26, the ad revenue acceleration math gets very interesting.
long RDDT 4.6%, adding
-muji
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