| Account | Shares | Price | Value | % of acct | Cost/sh | Gain $ | Gain % | Target |
|---|---|---|---|---|---|---|---|---|
| HSA | 3 | $158.10 | $474 | 0.44% | $180.85 | $-68 | -12.6% | — |
In short: "I actually think it's a good investment… at a good valuation today" — just added to the S&P 500, 66% TTM revenue growth, advertisers +70%, $3B cash, ~25 forward PE / 3% FCF yield after a 35% YTD fall. Its asset is authentic human discussion in a bot-filled internet; the risk is AI answers intercepting search referrals, plus the decision to stop disclosing logged-in/out users.
Reddit is one of the few places online where real people discuss things in depth, which matters more as the internet fills with bots. It makes money by letting advertisers target very specific communities, and by licensing its conversations to AI companies. Revenue is growing about 66% a year, the number of advertisers about 70%, and it has $3 billion of cash.
The worry is that AI tools now answer questions directly, so fewer people click through to Reddit from Google — and Reddit stopped reporting a user metric that would show whether that is happening. After a 35% fall this year, Carlson thinks the price (around 25 times next year's earnings) is reasonable for a business he expects to be around a long time.
In short: One of the nine selective non-AI growth names attracting Q2 buyers — "more like stock picking than a broad rush back into software."
In short: The index-inclusion payoff on a position built over the prior three weeks: "Reddit was set to join the S&P 500, which resulted in a huge rally for our holdings."
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In short: The follow-through on last week's featured idea: "Reddit, we added at 137, it's already at 160. That was a few days ago."
The follow-through on last week's featured idea. He had bought more Reddit at $137 after the stock fell 23% on a quarter that beat on everything except US daily users. Days later it was back at $160.
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In short: The week's featured add — bought 10-15 bps in the $130s after the stock fell 23% on earnings. The print was strong everywhere that matters: Q3 guide $860-870M vs $829M consensus, EBITDA $385-395M vs $367M, advertising +64%, net income $252.8M vs $89M a year ago (est. $196M), and US ARPU +51% to $11.85 vs $10.50 expected. The only soft spot was US DAUs (53.2M vs 54.0M est; global DAUs +18% to 130.3M, slightly below). "We think it's quite cheap in the 130s and the stock is probably worth around 200" medium-term. The model is saved here: Reddit valuation & risk framework.
Reddit sells advertising against its discussion forums. It reported a quarter where almost everything improved — revenue guidance for next quarter came in well above what Wall Street expected, profit tripled, and the amount of money it earns per American user jumped 51% — yet the stock fell 23%. The reason was a single soft number: US daily users came in at 53.2 million instead of the 54 million analysts penciled in.
Singh thinks that's the wrong thing to focus on. Reddit is still adding users overall (up 18% worldwide) and is rapidly getting better at making money from each one, which is the harder half of the problem. He bought more in the $130s and thinks the stock is worth around $200 over the medium term. The model he uses is saved alongside this page.
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In short: Monetization outruns users. Q2 revenue +61% Y/Y to $805M ($74M beat) and GAAP EPS $1.25 ($0.29 beat), with adjusted EBITDA more than doubling to $343M at a 43% margin. Advertising revenue grew 64% to $762M while ARPU jumped 36% to a record $6.18; Reddit Max adoption increased more than 60% Q/Q with product revenue up over 150%; other revenue including data licensing grew 24% to $43M. The concern remains user growth: global DAUs rose 18% to 130 million, but US users slipped sequentially to 53.2 million. Management said product improvements added users during the quarter but volatile search referrals offset the gains — with Google AI Overviews and chatbots increasingly summarising Reddit content, investors worry fewer search users will click through and become direct users. Reddit argues app users are worth several times more than search traffic and is prioritising feed quality, onboarding and retention, but visibility remains limited and Q2 will be the final quarter separating logged-in and logged-out users. Q3 revenue guided to $860–$870M, well above consensus, with adjusted EBITDA margin around 45%. "Reddit is monetizing its audience faster than almost any consumer platform. The unresolved question is whether it can keep growing that audience as AI changes search behaviors." (Recap, not a stance call.)
Reddit is squeezing far more money out of each user than almost any consumer platform — revenue up 61%, average revenue per user up 36% to a record $6.18, and profit margins reaching 43%. The worry is the denominator. US daily users actually fell slightly, because a large share of Reddit's audience arrives via Google searches, and Google's AI summaries and chatbots increasingly answer the question on the results page using Reddit's own content — so fewer people click through and become regular users. Reddit's response is that app users are worth several times more than search visitors, so it's investing in feed quality, onboarding and retention instead of chasing search traffic. Next quarter's revenue guidance is well above expectations, so monetisation isn't the issue. Whether the audience keeps growing as AI reshapes search is. A recap, not a call.
In short: Sold off Jul 22 on rumors it may walk from the $60M/yr Google-Gemini data deal — "just a negotiation tactic; Reddit probably wants closer to $150-200M per year because it's the sixth-largest website on the planet." Fundamentals accelerating: Q2 revenue tracking +55-60% vs 46% consensus, Q3 tracking >70% YoY; $2.8B cash, zero debt; ~17× NTM earnings with EPS +42% over two years — "those estimates are probably too low."
Reddit dipped on a rumor it might walk away from the $60 million a year Google pays to train Gemini on Reddit's conversations. Singh reads that as a bargaining move, not a breakup — Reddit is the sixth-biggest website in the world and probably wants $150-200 million a year, arguing Google gets more value from citing Reddit than Reddit gets back in traffic.
The reason to own it is the ad business underneath: revenue is tracking up 55-60% this quarter against a 46% consensus, and over 70% next quarter — i.e. growth is accelerating, not fading. With $2.8 billion of cash, no debt, and a share price of about 17× next year's earnings while earnings are set to grow 42% over two years, his conclusion is blunt: "those estimates are probably too low."
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