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Personal thesis • Not investment advice

Why I Went All In on RDDT

Reddit sits where the internet actually decides things. It turns questions into purchases, curiosity into action, and threads into a data asset AI companies can’t stop calling.

$1.3B Full-year 2024 revenue (+62% YoY)

$1.2B 2024 ad revenue (+50% YoY)

90–93% Recent gross margins

$500M Q2’25 total revenue (+78% YoY)

$465M Q2’25 ad revenue (+84% YoY; ~84–93% of total)

~7–10% Recent revenue from AI/data licensing

TL;DR: Reddit doesn’t just sell attention — it sells decisions. Ads ride high-intent communities, and data licensing monetizes a uniquely human conversation graph. High gross margins add leverage. That’s a combo worth a dramatic portfolio entrance.

The Core Idea (a.k.a. “Why this one’s a keeper”)

Reddit is the internet’s “show-your-work” layer. People ask, compare, argue, and then buy — in public. That means conversion-friendly context for advertisers and an ever-growing dataset of real questions and real answers. The kind of “receipts” AI models crave.

Where the Money Actually Comes From

1) Ads built around intent (not just eyeballs)

• Subreddit-level targeting hits niche audiences exactly where they’re deciding.
• Recent quarters: breakout ad growth as formats and tools sharpen.

Competitor subtweet: TikTok sells dopamine; Reddit sells decisions. Different checkout button.

2) Premium & paid experiences

• Ad-free and perks add a steady, high-margin layer without reinventing the feed.

3) Data licensing to AI (the spicy tailwind)

• Existing deals include Google (≈$60M/yr). OpenAI is widely estimated around ≈$70M/yr. Together, AI/data licensing has been running ~7–10% of revenue recently — small, but very high margin with room to scale.
• Reddit defends the asset (see actions against unauthorized scraping). The message: pay for the good stuff.

Unique data moat

High-intent communities

Rising ad yield

High gross margins

AI optionality

Translation: even modest execution wins can boost revenue per user without needing infinite doomscroll time.

Handling Your F. Planner's Raised Eyebrows

• “Just buy the index.” Respectfully, that’s like ordering plain oatmeal at brunch. Great macros, zero swagger. RDDT is the upgrade with fruit, honey, and a side of optionality.
• Meta: masters of attention. Reddit: master of intention. One optimizes for scrolling; the other for choosing.
• X: like a cafeteria food fight. Reddit: more like a seminar where someone actually did the reading.
• Search engines: even they add “reddit” to get real answers. If the librarians are citing the group chat, the group chat is winning.

Risks (eyes open, jokes aside)

• Ad cyclicality: brand budgets can wobble with the macro.
• Community governance: push too hard, users/mods push back.
• Licensing volatility: AI/data revenue is newer; partners and policies evolve.

What to Watch Next

• Ad platform performance: targeting precision, formats, return on ad spend.
• AI/data deals: breadth of partners, contract sizes, productization.
• Engagement quality: healthy DAUs, time-in-subreddit, signal-to-noise.

Bottom line: RDDT monetizes decisions today and the knowledge graph underneath them tomorrow. Community gravity + high margins = a thesis with main-character energy.

Note: Opinion only, not investment advice. Do independent research and size risk responsibly.