Reddit, Inc.
Communication Services · Interactive Media & Services
Reddit is a hybrid social-ads + AI-data-licensing read: ~90% of revenue is still ads (DAUq ~108M, ARPU expanding off a low base vs $META/$SNAP) but the data-licensing leg (Google ~$60M/yr multi-year, OpenAI ~$60M/yr) reprices the corpus as a strategic LLM training input.
Search indexation by Google has structurally lifted SEO traffic post-2024 ranking change, and Reddit Answers (in-product AI search) is the platform's defensive moat against ChatGPT cannibalization of forum lookups.
- Data-licensing line is high-margin recurring revenue with no incremental cost; every new LLM lab is a potential renewal/expansion
- Ads ARPU still under-monetized vs peers; international + performance ads are early innings
- Reddit Answers + ML-driven feed = path to $META-style engagement compounding
- Logged-out users (search traffic) now a contributor - long tail of monetizable surface
- Ad revenue concentration in US makes any macro slowdown a direct hit
- LLM crawlers route around licensing via scraping; enforcement is contractual not technical
- Moderation reliant on unpaid volunteers - 2023 API blackout showed fragility
- Trades at a Communication-Services multiple but earnings still GAAP-negative ex-SBC; valuation leans on data-licensing TAM narrative
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