Reddit: One-of-a-kind Powerhouse Supercharged by Google

Reddit RDDT 0.00%↑ is a general-purpose discussion forum powered by 100k+ topic-specific communities. “Great, but that’s not One-of-a-Kind”, you might say.

There is more.

I lay out bull vs bear battle breakdown, growth driver(s) deep dive, 5Y base case at 15% expected IRR, and much more.

Reddit is “Where trending topics get attention”. Take a sensational moment from the 2026 Olympics: Jack Hughes lost his teeth, scored the winning goal, and won the Gold medal for USA Hockey: a post from a fan on Reddit (right) racks up as much engagement as a major news outlet (CBS)’s post on Facebook (left).

Reddit is also “The Internet Truth by Collective Human Wisdom," a title Wikipedia once held. If Wikipedia provides the textbook theory/formula, Reddit is the forum where users explore how that works in real life. A random example of “Cuisine” shows that difference: Wikipedia introduced the etymology and history of each major cuisine; Reddit users started with a simple rating chart, followed by thousands of comments sharing opinions, recipes, and local suggestions. 

Wikipedia led the space from 2005 to 2020, and since 2023, Reddit has gradually overtaken it, with its traffic growing from 20% of Wikipedia's in 2015 to surpassing it in late 2025.

Reddit thrives on both trending topics that immediately engage readers and long-form, timeless articles that users return to repeatedly.

We observed the former in X, Snapchat, and Instagram, and the latter in Wikipedia, but no platform other than Reddit handles both well.

Let me bring the point home: Reddit is different, at the moment.

Bull Case: Reddit’s 60%-70% YoY revenue growth over two years (from $0.8Bn in 2023 to $2.2Bn in 2025), and its turnaround from negative EBITDA in 2023 to 25% net margin in 2025 (and 35% in 4Q25!), outpaced all its peers (SNAP, PINS, and even META) by a wide margin.

Despite notable progress, its stock is ~45% below its Jan 2026 ATH amid the recent AI/software bloodbath. Many (especially value investors) see Reddit as the baby thrown out with the bathwater.

Bear Case centers on the sustainability of its growth (and profitability), concerning its recent traffic surge (since late 2023), largely tied to Google’s search algorithm update that favored Reddit.

Companies overly dependent on Google often endured long-term declines when Google's algorithm shifted (e.g., TripAdvisor, Yelp, Chegg, all down significantly over the years, largely due to Google’s algo changes).

This article discusses:

• Background

• Recent growth in DAU and ARPU

• Google and Growth Sustainability

• Model-driven Valuation

• Positioning Strategy

• Risk and Watchlist

Reddit was founded in 2005 by Steve Huffman (CEO) and Alexis Ohanian. It was acquired by Condé Nast in 2006 and gained independence in 2011. Following controversies during Ellen Pao’s tenure, Huffman returned as CEO in 2015, reaffirming Reddit’s vision of user-empowered communities. It went public in 2024.

The two charts below underscore Reddit’s extraordinary growth in users and earnings power since late 2023, after nearly 20 years of stagnation.

Its DAU (Daily Active User) grew 30%+ YoY for 6 consecutive quarters since 4Q23, entering 2023 at 60Mn and doubling to 120Mn by EoY2025. In contrast, SNAP and Pinterest DAU grow at ~10% YoY for 2024 and 2025.

Its ARPU (Average Revenue per User), a key metric for measuring platform earnings power, grew 40% to 60% YoY each quarter in 2025, while SNAP and Pinterest are mostly flat, and Meta is in the 10-20% range.

As a note for reference, Reddit’s US ARPU was 60% of SNAP and 80% of PINS in early 2024 and surpassed PINS and was on par with SNAP by the end of 2025.

One might ask: What is the secret formula for Reddit’s outstanding business performance over the last two years, especially given its 20-year stagnation since inception, and, more importantly, can the growth be sustained?

Also, Reddit has been ~4x since the IPO and 45% off its ATH (from Jan 2026). Is this a trap or a buy opportunity?

Let us dive into them.

Reddit’s rapid user growth since late 2023 is driven by two main factors: Google’s content policy updates in late 2022 and implemented in 2023, and Reddit’s international expansion, starting in 2024.

Google Update: its 2022 Helpful Content Update marked a paradigm shift in its algorithm, prioritizing people-first forum-discussion content with real experience over SEO-optimized, AI-generated content. With over 100k interest-based communities, all user-generated content, Reddit is a primary beneficiary of that update. Reddit saw a notable increase in its content ranking on Google, with site traffic rising by over 100% from July 2023 to April 2024.

International Expansion: In late 2023, Reddit announced its plans for international expansion and appointed a VP of International Growth before its Feb 2024 IPO. The expansion began in early 2024, with a major rollout in September 2024, featuring AI that translates Reddit content into other languages to boost cross-language participation. The effort continued, with 23 languages live in 2Q25, increasing to 30 in 3Q25.

The Reddit NorthAm/RoW DAU YoY% chart below shows the significant and immediate impact of these two factors on user growth.

Google’s impact is global, though the US is a bit ahead of the RoW, as Google’s rollout started with English-language searches, the effect of which can be observed from the chart that the red line (RoW DAU YoY%) follows the trend of the blue line (NorthAm DAU YoY%) till 2Q24 when international expansion kicked in.

It is worth noting that, since 2Q24, RoW vs US DAU YoY% shifted from -1000bps to about 2000bps in 4Q25, with a 3000bps(!) catch-up, driven by international expansion.

A few management commentaries wrt international growth:

1Q24, S Huffman (CEO) - On Int’l expansion initiatives.

I think one of the big unlocks for us in the near to medium-term is machine translation. So we’re translating our entire corpus that’s today mostly in English and the other languages and hope that, that will help accelerate international growth.

3Q24, S Huffman (CEO)

This year we started using AI to translate Reddit’s corpus into other languages… After promising results with French in the first half of this year, we expanded to include Spanish, Portuguese, Italian and German.

This quarter, machine translation drove four times more users than last quarter, and based on the success we’ve seen so far, we plan to expand to over 30 countries through 2025.

And the machine translation has some other positive externalities. One is that the translated content gets indexed into other search engines.

4Q24, S Huffman (CEO)

So Reddit is roughly 50-50 U.S. versus non-U.S. Peers in the space are 80% to 95% non-U.S. We have no reason to believe that we won't be in that range because Reddit is universal, because communities are universal.

2Q25, 3Q25 on translation rollout

Machine translation is now live in 23 languages, unlocking Reddit for millions of people across Asia, Europe and Latin America. (2Q25)

Our international growth continues to accelerate. Machine translation is available in 30 languages, and it's a major driver of top-of-funnel growth outside the U.S. (3Q25)

I will start with 2 tables comparing Reddit and its 3 peers (Snap, Pinterest, and Meta), their top line and related metrics (ARPU and RPH*) for 4Q24/4Q25 in North America.