Mindset for Money
CPA, Financial Analyst, Former Big Four Auditor
Reddit's valuation looks much safer than CrowdStrike's despite stronger growth and profitability. Reddit trades at 25x forward earnings, grows 60% and has 28% operating margins; CrowdStrike trades at 190x while growing 25% and, in this comparison, is not profitable. The businesses differ, but the gap in market appreciation is too wide; Reddit offers strong risk/reward. x.com x.com x.comÂ
Reddit's push toward required logins could improve targeting and monetization but may hinder search discovery and add friction for casual users. Revenue rose 53% to $895M and free cash flow reached $363M, yet overall user growth lagged despite a good showing from US logged-in users; stock-based pay was higher than desired. Google will probably pressure near-term DAU growth. The finances remain solid, but the login strategy's impact on growth needs more clarity. x.com x.com x.com x.comÂ
Reddit's logged-in users drive monetization, so weak search-driven traffic matters less than ARPU. Reddit says app and logged-in users grew sequentially in Q3 and generate over 80% of monetization, though lost search referrals also hurt them. ARPU rose 53% despite barely higher users; a low ad base could allow it to double even with muted growth. Restricting Google scraping might force a licensing deal that helps its Anthropic case and OpenAI renewal, though no deal is certain. x.com x.com x.com … Show more
Reddit's worsening US user growth threatens its revenue runway despite elite ARPU growth, revenue growth and margin expansion. US daily users fell 2% year over year and missed estimates by 7%; the Q4 guide was weak. It needs healthier user growth in its most important market to dispel Google/AI discovery fears. Forward indicators do not look promising, and the trend of positive estimate revisions will end. x.com x.comÂ
Reddit's human conversations are gaining value as AI content proliferates, supporting advertiser spending and AI data licensing. Revenue grew 61% last quarter, with margins in the 40s, but US user growth slowed to 6%. Advertisers are paying more each quarter and AI labs pay for Reddit's data. Overweight; $200 target. x.comÂ
Reddit can grow without adding users because monetization is still in early innings. ARPU rose 41% in a year, from $3.58 in Q3 2024 to $5.04 in Q3 2025, across 116 million daily active users. Price target: $493. x.comÂ
Reddit's Q3 drop in US daily users risks another poor market reaction, even if headline earnings are strong. Last quarter a slight sequential decline in US daily users sent the shares down 20% despite a massive triple beat; the new chart shows a further sequential drop in Q3. x.com x.comÂ
Reddit should have a huge 2027. It is a better company than Pinterest both fundamentally and technically, as its financials show. x.com x.com x.comÂ
Reddit still looks undervalued as Needham's Q3 traffic tracker shows app downloads up 19% and web visitors up 2-3% quarter over quarter, adding to strong alternative data behind an expected Q3 beat and raise. Shares trade at 18x next-twelve-month EPS while revenue is growing 60-65% and EPS 65-70% year over year; new Anthropic, OpenAI or Gemini licensing deals remain possible over the next couple of months, not secured. x.comÂ
Reddit's stock is unlikely to rerate until it shows cleaner US daily user growth and less reliance on volatile search referrals, despite a strong financial engine. US DAUq grew only 6% versus 28% internationally, logged-in growth was just 7%, and management called search traffic volatile. The 100M US DAU goal looks further away, AI licensing showed no progress with other revenue up 24% to $43M, and the $860-870M Q3 revenue guide did not address user concerns. x.comÂ
Reddit's fundamentals have disconnected from its share price. Revenue is growing 61%, US revenue per user 51%, and net margin is 31%, yet the stock is down 34% this year. x.comÂ