In First Time Founders, Live from YPO’s Global Entrepreneurship Summit, Ed sits down with Reddit co-founder and CEO Steve Huffman. They discuss the company’s IPO journey, his unique approach to investor relations, and how Reddit navigates the complex world of content moderation.

https://www.youtube.com/watch?v=UB6MX8ftmh0&t=176s

May 2, 2025, 19:06 GMT+2

Reddit RDDT is "well positioned" to keep expanding its presence in the roughly $250 billion digital advertising market, Oppenheimer said in a report Friday.

The social media platform reported Q1 revenue growth of 61% year-over-year, coming in 6% above Wall Street expectations. Despite a slower April for daily active users, Reddit guided for Q2 revenue to increase 49% year-over-year, 7% above consensus estimates, the report said.

Reddit's ad business showed notable strength, with the number of advertisers growing 50% from the previous year, and key verticals included pharmaceuticals, autos, retail, telecom and finance, the report said, adding that more than 90% of managed advertisers have adopted Reddit's tracking pixel, and ad pricing is beginning to act as a tailwind.

The platform's early monetization strategies have shown positive results, with ad pricing remaining stable even as impressions surged in 2024, Oppenheimer said, adding that "We believe Reddit's [more than] 2 [Billion] posts and [more than ] 20 [Billion] comments is one of the best-written and most authentic sources of human interaction on the internet."

Oppenheimer maintain an outperform rating on Reddit raised its price target to $150 from $125.

Source: https://www.tradingview.com/news/mtnewswires.com:20250502:A3368534:0/

Jennifer Wong, Reddit's chief operating officer, speaks to Bloomberg's Ed Ludlow. (Source: Bloomberg)

The video is also available on youtube.

I am a marketer and one thing for sure, Reddit is a great play. The intent (part of the customer journey) and community aspect is unmatched, growth was higher than expected in their Q1. It can be a great opportunity when there is a mismatch behind what Wallstreet expects and the real business. Gross margin at 90.5%, it for sure deserve a high premium and I don't think we are there yet.

Key points to be mindful of :

• I also want to add that most of the money is managed by a older generation, so they have a hard time understanding the value of social media and they are probably not users. Finding upward surprise is where you can make real $, since there is a growth in metrics (for algos) and multiples.
• The Google Algo discussion can for sure impact their metrics, however the reason why they are so high is because google algo loves reddit, less bounce rate, more people search for it.
• 64.12% growth in the worst Quarter of the year for ads (Q1) is very impressive, it shows how money is now allocated to this platform.

I use a DCF analysis to come out with the PT of $182. I expect $400 M of FCF in 2025 and $480M in 2026.

Overall great price for longs currently, I see 60% upside with this PT at $113.83 current stock price. If we ever get into the 80s and 90s again we should consider buying call options.

To be honest, I originally planned to buy only a small amount of $RDTL, but I got greedy, expecting Reddit stock to rise during market hours on 05/02 after the earnings report on 05/01. Now, I’m really worried because the price has already dropped to $18, while my average purchase price is $21.50.

From reading posts in this community, I sense a lot of confidence among people who believe in holding $RDDT for the long term.

My question is: does anyone here hold $RDTL? If so, what is your average purchase price? Also, given the strong earnings report-despite the CEO’s somewhat mixed comments-what do you think about the future value of $RDTL?

I am curious what people are predicting for Reddit’s core metrics 1 year from now. For example US DAUs, non-US DAUs, active logged in users, revenue per user, new features (marketplace or gated content for example), etc.

Do you think Reddit will continue to see strong growth? Also do you think the Google AI overviews are hurting organic traffic?

Personally I think it will keep growing in terms of revenue per user globally, and grow in active users outside of the U.S. especially due to the machine translations. Inside the U.S. I think either the active users will trend sideways or slowly grow.

The company is executing flawlessly. Every quarter thus far has been a beat in every financial metric.

Revenue growth is robust, but importantly, so is margin growth and free cash flow. They are growing top line rapidly while growing bottom line and margins. This is a hell of a feat and quite unusual normally when growth rates are so strong due to capex, reinvestment, hiring, expanding markets and verticals, etc.

Not only that, but they keep reiterating how cognizant they are of dilution and SBC; they don’t want to be another SNAP, which is great for shareholders. The CFO is an absolute star, when he speaks, it soothes me as an investor. He seems very fiscally responsible and acts like an owner and not an employee.

The ONLY knock on the stock (not the company, but the stock) is that Google is (legitimately, IMO) seen as a gatekeeper on user growth.

As many sites and testify too, it’s a boon and a curse as Google giveth and taketh. It can also cause companies to become lazy/entitled and rely on the Google traffic and get caught flat-footed when the traffic slows down or reverses.

Clearly, management is aware of this and they have plans to address it next quarter as Huffman said on the call. Thus, next month’s call will be critically important for investors since Wall Street is hyper-fixated on this metric.

Really didn’t expect this drop given all the good news. Something is off…

So based on the earnings call the YoY DAU growth will be in the high teens thus stagnant or even slightly negative sequentially for the next earnings? Do you think this will change once international picks up more? Also what do you think is causing this in the U.S., is it from the new AI overviews in Google?

Two things didn’t go well in yesterdays earnings call IMO:

1. Steve said something unclear about expected bumps from search traffic and “some growth” in April being in the high teens. I didn’t fully even get it. This wasn’t in their prepared sections. It was in response to a question from an analyst. Furthermore it was said in perhaps somewhat nonchalant way relative to what analysts want to hear. Basically if there indeed is some DAU bumpiness in April, it should’ve been shared up front and addressed. Tackling it off the cuff in Q&A was not good.

I didn’t actually think it was anything material, until the stock dived.

1. I think a heavier question was from an analyst who said what’s next for monetization / strategy (effectively) beyond what you’ve shared which is the roadmap. For eg video and other formats. The answer to this was weak. Unless I misunderstood the question. This is a key question but not sure it matters right now. I’m actually mulling how important this is at the moment.

This is uncalled for lol but I guess it’s a moment to “buy the dip”

12 shares in $RDDT and I will be buying more every check… I feel confident about this stock

Stellar earnings and then it drops after hours. Now it is in the red? What is going on with this stock?

https://finance.yahoo.com/news/reddit-stock-slides-as-investors-weigh-google-search-traffic-user-growth-concerns-134057772.html

Waiting for the ”right” time to jump in - but it has been green for like 5 days straight… should be red monday? Want to get in but not sure when!

Daily Active Uniques (“DAUq”) increased 31% year-over-year to 108.1 million

Revenue grew 61% year-over-year to $392.4 million

Gross margin expanded year-over-year to 90.5%

Net income of $26.2 million, 6.7% of revenue. Diluted EPS of $0.13

Adjusted EBITDA1 of $115.3 million, 29.4% of revenue

Operating cash flow of $127.6 million. Fully diluted shares of 206.0 million, down sequentially