You know the site where strangers argue about everything from GPUs to sourdough. Now that endless scroll of opinions is a real business with real profits, and a stock the market still can’t quite decide how to price.
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SEE HOW THEY STACK UP
Strategic Positioning
Reddit Inc (NYSE: RDDT) is basically the world’s message board: millions of communities, billions of comments, and a very online user base that treats it like a second brain.
The money side has two pillars:
Ads — brands pay to show up where people are already obsessing over a topic.
Data — AI companies pay to train on what those people are saying in the first place.
That second bit is the twist. In an AI world starved for human, messy, non-scripted language, Reddit’s archive of arguments and in jokes suddenly looks like a rare mineral deposit. Deals with giants like Google and OpenAI help turn that into a real revenue line instead of just good vibes.
If you own the stock, you’re not just betting on another social app. You’re betting on the place where the internet goes to think out loud.
Recent Momentum
The business is moving much faster than the memes.
Revenue just landed in the mid-580 millions for the quarter, up nearly 70% year-over-year.
Earnings crushed expectations — almost double what Wall Street had penciled in.
Adjusted EBITDA margins jumped into the 40% range, which is real money, not just “one day we’ll be profitable” talk.
Daily active users hit the mid-100 million range, climbing close to 20% year-over-year.
On the ad side, more advertisers are piling in and spending more. On the data side, licensing deals are now a proper business line, not a science experiment.
The stock has responded, up around 40% this year and miles above the IPO price, even after some sharp pullbacks. This thing moves, as it has racked up dozens of 5%+ days in a single year, so you’re signing up for mood swings.
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What You’re Actually Betting On
If you buy RDDT here, you’re making a few simple calls:
Communities are the moat
People don’t just scroll; they belong. Subreddits are hard to copy because they’re built over years of inside jokes, mods, and norms.
That stickiness gives Reddit more pricing power with advertisers than raw impression numbers suggest.Data is the secret weapon
Authentic, human conversation is exactly what AI models need and exactly what a lot of platforms can’t sell anymore.
If Reddit can keep signing and expanding those data deals, it has a second growth engine that’s not tied to how many banner ads it can cram into a feed.Operating leverage keeps kicking in
Once the core platform is built, each extra dollar of revenue should fall through at higher margins.
Last quarter’s step up in profitability is the first real proof that this is happening. You’re betting that trend continues as revenue scales.
If those three click, the story is bigger than just social media stock catches an AI wave.
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Valuation Check
Let’s not pretend this is cheap.
At around 230-plus per share and a market value in the mid-40 billions, you’re paying a triple-digit price-to-earnings multiple on current numbers and a very healthy multiple of sales. This is a growth stock price tag, no question.
What you get for that:
Revenue growth running 50%-plus in the near term
Earnings estimates that keep getting revised higher
A business that already has solid margins instead of promises
Your edge is not pretending it’s a value play. Your edge is deciding whether you believe the growth can stay high long enough for earnings to grow into that sticker price.
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Action Plan
If you want exposure, treat this like a high-beta growth name, not your sleepy dividend anchor.
Size small — think 0.5%–2% of your equity basket, not 10%.
Stagger entries — it’s volatile; use that. Add in chunks on red days rather than chasing every breakout.
Anchor on execution — add or trim based on user growth, revenue growth, and margin trends, not just headlines about the latest AI model.
If you’re more conservative, this can sit in a “fun bucket” next to a core portfolio of steadier names.
Catalysts To Watch
You don’t need to read every earnings call transcript. Just keep an eye on a few levers:
User growth — daily and weekly active users should keep growing high teens or better.
Ad strength — higher ad revenue and more active advertisers show brands are getting real value.
Data deals — renewals and expansions with big AI players, plus any new large-cap partners.
Margins — adjusted EBITDA margins staying in the 40% neighborhood or creeping higher.
Guidance — management’s revenue and profit outlook; this is where expectations get reset.
If those lines keep trending the right way, the fundamental story is intact even when the stock throws a fit.
Risks
This isn’t all upside. A few ways this can go sideways:
Ad slowdown — if brands pull back on budgets or shift spend elsewhere, growth can cool fast.
Data backlash — privacy, regulation, or AI-training drama could limit how aggressively Reddit can monetize its content.
Community revolt — the site’s users are famously vocal. If they feel over-monetized or ignored, engagement can suffer.
Valuation compression — even with good execution, the market can decide it no longer wants to pay 80-plus times forward earnings for social+AI exposure.
Know these going in so they don’t surprise you later.
What A Win Looks Like
A realistic win here is not to the moon in three months. It’s more boring than that:
Revenue growing 25%-plus year-over-year for several more years
Daily users compounding steadily while ad revenue per user keeps ticking up
Data licensing becoming a meaningful, recurring revenue stream
EBITDA margins staying north of 35% as the platform scales
If Reddit hits those marks, today’s wild-looking multiple starts to fade as earnings catch up. You don’t need perfection; you just need the company to stay roughly on this current path.
Final Take
This is one of the few true community platforms that also happens to sit on a mountain of AI-grade data — and it finally has the financials to match the storyline.
The stock is volatile, expensive, and noisy, but the business underneath is real and getting stronger.
If you can handle the swings and keep your position size sane, RDDT can be a high-upside satellite holding in a portfolio built on calmer names.
Just remember: you’re buying both the comments and the chaos.
That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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