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A Heavy Bet on Reddit Ads and Data Monetization
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Everyone knows Software is down. It's about picking the best ones. So it comes down to AppLovin and Reddit. Don't ask me how. Just trust!
I'm not investing in a company called AppLovin. It's already embarrassing talking about being a Reddit investor. What kinda name is AppLovin lmao.
They say invest in stuff you know and I know Reddit better than my Exes clitoris.
We got revenue growing at around 70% a year. With 90% gross margins. EPS growing in the triple digits. The PE is 50 and the forward PE is 35. This shit growing faster than it's trailing PE!!
The PEG is the god indicator and it's under .3!! For a company growing around 70%!! You retards probably don't even know what the PEG is. It's not about Pegging, sure that's also amazing, no it's Price to Earnings Growth! Anything under 1 is considered undervalued. This stock has a beta of 2 yet its PEG isn't even half of 1. Well tbh that's for TTM. For future it's closer to 1 at 1.2, but we will soon go over how bad analyst are at projecting Reddit earnings. Later on.
Ok so you might ask what are the risks? Well pegging comes with a lot of risks but if you mean this stock then very little.
RISKS
Welllll if there's a recession, then Reddit is screwed. They rely on Ads primarily to make money and companies cut ad budgets the first during recessions.
Management only guided for 44% revenue growth in Q2. I believe they are sandbagging. The previous 7 quarters they beat analysts, which already guide slightly higher than Management. In fact the average EPS beat is around 50%. Yes you read that correctly, avg eps beat is very high and the FWD PE is only 35.. which takes in analyst predictions, which they always easily beat...
The real risks are Google deprioritizing Reddit links. I believe this will not happen. We are in the age of AI now and Google already summarizes everything. Reddit constitutes the largest share of their citations. And people want human opinions most for some reason. If they stopped giving Reddit good citations then Reddit will stop letting Google access its website in the future.
So how does the future look?
ADS ADS ADS
I think Reddit will become a tier 1 ads player along with Google and meta. Google commands highest ad prices bcuz they serve you the perfect ads for what you are looking for. Meta knows you better than you know your wife's clitoris. So they can target random perfect ads to you.
So why would basement dwelling redditors be as good as those customers? Well we possess both of those. Subreddits are niche communities. And they can be perfectly targeted for the exact type of products suited for those members. So for example, in the ford subreddit, any car marker who wants to target ford fans/customers can set up ads. Now that is a goldmine for said automaker. Chevy would love to advertise to these types of people. Consequently this applies to almost all niches yall regards are into. Hence like Facebook, except we are more authentic here than on Facebook. People aren't going to talk about depression or hair loss or erectile disfunction on Facebook as they would here.
Ok so then why aren't we already a tier 1 ads player? Why does Reddit have cheap prices for ads? That's bcuz Reddit is still new in its monetization journey. Reddit was focused on the core product for most of its history. They intentionally grew slowly and let communities build before finally now monetizing the platform.
Now Reddit is focusing on rapid user growth, engagement and advertiser teaching and adoption.
There are low number of advertisers on Reddit bcuz historically they didn't know how to show us degens Ads. We would troll the fuck out of them if the Ad wasn't suited for us. We would post harambe with massive dick pics in the comments etc. But Reddit has done a lot of work teaching and automating to make it easier for advertisers to make Ads tailored for reddit. Now the flywheel is set and the Ad world is learning the potential of high intent communities. Right as Google and meta ad prices are getting out of control. Reddit is 1/4 or Metas average revenue per user (ARPU). So even if user growth stalls (unlikely), we have many years of high growth for ARPU just to catch up.
Our low ad rates is bcuz less advertisers, they can set up expensive ads in popular subreddits or they can target the same user when he visits less popular subreddits. Number of advertisers is growing also really fast around 70% a year. And recently they just added Shopify integration. Shopify is promoting Reddit as an Alternative to tier 1 ad players but at a fraction of the cost.
OTHER RISKS
Reddit stopped reporting Logged in users. Essentially bcuz tbh US logged in growth stalled. But logged out users is still a massive number. Reddit has been working to bridge the advertising gap between the two. Visiting niche communities already sets intent. So logging in doesn't matter all that much. And we have seen companies like Netflix, Apple stop reporting numbers and the stock did fine in the long term.
I believe we will keep growing in users, Reddits daily users are around 126M (Q1 report) growing in the low double digits. I believe people are more and more becoming lonely and need community. And Reddit is probably the best online social media for that. Facebook is trash let's be honest, Instagram is good tho, TikTok is full of broke kids, same with snap, X is all rage bait, Pinterest is.. idek what tf Pinterest is, who even uses it..?
BONUS
Reddits side gig is selling its User data to LLMs. Currently the rate is $60M a year. Which is considered by pretty much everyone and their mother to be a steal.
The renewals will come up in early 2027 and are expected to be a few times that amount at the minimum. Now why would they renew if they already mined all the data? Well without constant fresh human data, LLMs would start stagnating in relevant info over time. The internet is starting to shut its doors to bots as well. If LLMs don't get fresh human data and keep getting bot data, then that leads to so called Model Collapse. Reddit is the perfect website for LLMs, it's all human data now, with thoughtful responses, pre sorted by humans. And moderated by humans. Nothing like it exists.
Well not entirely, competition does exist. Hence the software sell off. But it takes years/decades to build up communities, hence they all die pretty quickly. Not even worth mentioning them.
TLDR: growing faster than PE. Just getting started with monetization. Data deals coming up for renewal with massive price increases.
POSITIONS: invested over $250K
1278 shares, 10 $200 strike calls expiring 6/16/28, 5 $200 strike calls expiring 8/21/26 (gamble trade)
Positions proof: https://imgur.com/a/VUeJnu9
I don't have a set price target, just know we are very undervalued with little risk. I would say Reddits Fair PE would be at least twice what it is right now. So double the stock price, considering the growth. But with data deals set to increase in value, I would say 3x current stock price is a reasonable target. So $500 by year end.
#RDDT #NotRelationshipAdvice
The stock discussed by the OP is Reddit (RDDT). The core view is that, even while software stocks are broadly under pressure, Reddit remains one of the few companies with sufficiently standout growth, margins, and potential monetization upside, which is why the OP chose to concentrate the bet on Reddit rather than AppLovin. The first part of the evidence chain comes from financial growth: the OP says Reddit's annual revenue growth is about 70%, gross margin is about 90%, EPS growth is in the triple digits, current PE is about 50, and forward PE is about 35, using a low PEG to argue that the valuation does not fully reflect the growth. According to Reddit's Q1 2026 disclosure, revenue grew 69% YoY to $663 million, advertising revenue grew 74% to $625 million, gross margin was 91.5%, and diluted EPS rose sharply YoY, which does support the basic assessment of “high growth, high gross margin, and improving profitability.” The second layer of logic is ad monetization: the OP believes Reddit's subreddits are high-intent, niche-interest communities that combine Google's search intent with Meta's interest graph, and can move closer to top-tier ad platforms over the long term. Current cheap ad pricing is not due to weak demand, in the OP's view, but because the number of advertisers and education around ad products are still in early stages. Shopify integration, dynamic product ads, and automated ad buying should lower the barrier for merchants to enter. The third layer is ARPU improvement: the OP argues Reddit's ARPU is far below Meta's, and even if user growth slows, revenue per user can rise through better targeting, more advertisers, and higher fill rates. The fourth layer is AI data licensing: the OP says Reddit's roughly $60 million per year in data licensing revenue could be repriced significantly higher when renewed in 2027, because LLMs need continuous, up-to-date, human-ranked and human-moderated conversational data, and could face model degradation risk without fresh human data. In terms of position sizing, the OP claims to have invested more than $250,000, including 1,278 shares of RDDT, 10 calls with a $200 strike expiring June 16, 2028, and 5 calls with a $200 strike expiring August 21, 2026. The post provides an Imgur link as position proof, and the OP also added screenshot links in the comments, but there is no direct image attachment in this message to verify. On the price target, the OP does not present a rigorous DCF, but instead believes a reasonable PE should at least double, with additional upside from a repricing of data-deal renewals, making $500 by year-end, about three times the current price, a “reasonable target.” The main catalysts are continued Q2 earnings beats, growth in advertiser count, Shopify merchant conversion, AI data contract renewals, and the market re-rating high-growth software. The implicit assumptions include: Reddit's user quality and community moat are real; ad ROI will improve as products mature; Google will not reduce Reddit's visibility in search/AI summaries; AI companies must continue buying Reddit data; and bots, content quality, moderator governance, and user aversion to ads will not materially erode commercial value. The biggest weakness is that the valuation argument is relatively rough, linearly extrapolating recent high growth into the long term and underestimating the difficulty of going from “having a targeting context” to “delivering scalable and stable ROI.” Commenters, including marketing professionals, also directly questioned poor Reddit ad conversion and weak targeting, which strikes at the core of the OP's ad-flywheel assumption.
The comment section is clearly divided. Some users followed along by holding RDDT shares or long-dated calls, arguing that the stock price rise after the post validated the thesis; others called for $300. Bears mainly questioned Reddit ad ROI, the proportion of bots, content dilution by AI, and the assumption that Reddit can become a “tier 1 ads player.” One commenter claiming to work at a marketing agency said that Reddit ads had delivered poor conversion and brand lift for several past client categories. The OP responded that the ad technology had improved, but the evidence was limited. Many highly upvoted comments mainly mocked the age implied by the title, the writing style, and the risk of going all-in.
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