HI HODLers, Hiveans and Lions,
Last Thursday, Reddit reported its Q1-2025 results and I believe they were extremely good! Stock was up +17/18% before the Earnings Call with the management.
Then some comments from the CEO tanked the stock and the next day it ended up the trading session down 4%! That's a 20/22% reversal! Crazy.
The main reason was the CEO more or less hinted that there might be a slowdown of the search traffic (mostly from Google) due to the AI Search rolled out by Google.
It is a threat but I believe Reddit is fully aware of it and transparent about it. They have been better at converting users into logged-in ones (This is very good for recurring traffic and data collection) and they have rolled out Reddit Answers which is a ChatGPT style App.**
Q1-2025 Results
- Revenue was $392.4 million, an increase of 61% year-over-year
- Net income of $26.2 million and net margin of 6.7%, an improvement of $601.2 million from the prior year
The Brazilian example
A big part of my investment thesis was the acceleration at the international thanks to Machine Learning which allowed the massive english-based content to be translated in local languages (French, Portuguese...). This is exactly what happened and traffic and users grew exponentially in these countries as shown below.
In addition the ARPU (Average Price Per User also grew in international markets, accelerating the Revenue $ numbers.
Time will tell if holding and adding to this position was the right move. I believe so!
Reddit Shareholder Letter Source
Stay safe out there,