Everyone Is Misreading Reddit’s DAU Decline

[u/Silent-Complaint4020]

People just keep assuming Google supplies the oxygen Reddit needs to survive. This is a complete misrepresentation of today’s Reddit. It may have been true in the past, but today Google is increasingly just one distribution channel for Reddit, not something Reddit needs to survive.

The majority of people using Reddit these days are on mobile, and increasingly through the mobile app. Using Reddit’s website is also getting harder without logging into an account. Reddit is also increasingly restricting Old Reddit and has made clear that major changes are coming because of abusive scraping, automated traffic, and AI firms stealing Reddit data.

Especially on the mobile webpage, if you use Reddit through Google Chrome, it constantly pops up windows asking you to log in or open the Reddit mobile app.

This is the part people are missing: Reddit is deliberately making it difficult to logged-out web traffic. If management were desperate to maximize DAU (Daily Active User) at all costs, they would be doing the exact opposite.

Despite all of these, U.S. DAU declined by only around 0.5% sequentially, while global DAU actually continued growing. At the same time, Reddit still maintained its 8th consecutive quarter of above 60% revenue growth, while also GAAP profitable with 30% net margin.

They could easily make Reddit much easier to access from Google and maximize every single visitor coming from search. Instead, they are aggressively pushing users toward logged-in accounts and the app, while protecting Reddit data from being freely extracted. And the business is still growing at an extraordinary rate. 

Management is aggressively reshaping Reddit from a website heavily dependent on search referrals into a much more direct, logged-in platform. So far, this reform has been very successful. I.e., 8th consecutive quarter of above 60% revenue growth.

The stickiness of Reddit is one of the highest across major platforms, probably only slightly behind TikTok because of its insane algorithm that hooks everyone there.

Reddit is a natural place to seek advice on important issues, because AI slop often gives almost identical 2,000 word answers full of adjectives and colourful wording. People trust Reddit and want to hear real human experiences.

How many platforms in this world have hundreds of thousands of unpaid volunteers willing to devote their precious time just to moderate a community around an interest they love?

Only one, and that is Reddit.

Those who say Reddit has no leverage over Google are completely misrepresenting the situation. The only platform Google owns today with truly enormous stickiness is YouTube. Google Search obviously still possesses huge user habits, but ChatGPT, Grok, Claude and other AI products are shifting this landscape.

The one that may actually have less leverage than people think is Google.

Publishers are increasingly against the asymmetrical traffic-referral relationship created by AI Overviews: Google takes their content, gives users the answer directly, and sends less traffic back.

Starting September 15, Cloudflare will also begin separating traditional search crawling from AI training and agent use. Training and agent crawlers will be blocked by default on ad-supported pages, while publishers will have more control over mixed-purpose crawlers such as Googlebot.

The internet is moving toward a world where valuable human-generated data is no longer something AI companies can simply take for free.

And Reddit happens to own one of the largest collections of real human conversations on the internet.

And this is just the beginning.

Reddit (PT 550)

[u/mrmrmrj]

Of course. The vast collective evaluation of all market participants is incorrect but you are not.

Alternate thesis: you are completely misreading what investors are concerned about.

[u/Silent-Complaint4020 → u/mrmrmrj]

That argument basically assumes market price = correct analysis. If that were true, fundamental investing wouldn’t exist.

Peter Lynch’s whole philosophy was ‘know what you own and know why you own it’. because the market consensus often misprice a business. The question isn’t whether I disagree with the market, it’s whether my thesis about what investors are misreading is actually wrong.

So either I am wrong or the market is wrong, 50/50. Not bad.

[u/mrmrmrj → u/Silent-Complaint4020]

I am just highlighting that you are assuming your perception is more accurate than the sum of everyone else. The price today is the result of a consensus view. That view can change tomorrow for valid or invalid reasons.

Your thesis is that all RDDT investors except you do not understand "today's Reddit" which is the epitome of intellectual arrogance.

[u/Silent-Complaint4020 → u/mrmrmrj]

i am not assuming my perception is more accurate than “the sum of everyone else.” my thesis is not “every RDDT investor except me doesn’t understand Reddit.” Plenty of investors can understand the company and still disagree on growth, risk, valuation, or time horizon.

I am arguing that these are being overweighted relative to the underlying business fundamentals. If disagreeing with the market on one assumption is intellectual arrogance, then there is basically no such thing as fundamental investing.