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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 & 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.

240 pts · 134 comments · u/MrActionJack · 2026-04-27 15:31 UTC