Let's talk about Reddit
Reddit is a vast social media platform where users from around the world share content, discuss topics, and vote on posts within interest-based communities called subreddits. Launched in 2005, it serves as a hub for information exchange, entertainment, and community building, driven by user participation.
Comparative Table
Source: https://x.com/i/grok/share/GXNFobe9O2VOmYzyFTYTWFPrH
Below is a table summarizing the findings for easy comparison:
| Company | MAU (millions) | Ads Revenue (billions) | 100*Revenue / MAU |
|---|---|---|---|
| 93.2 | 1.18 | 1.26 | |
| X | 400 | 2 | 0.5 |
| Quora | 300 | 0.02 | 0.006 |
| Stack Exchange | 100 | 0.06 | 0.06 |
| 3,000 | 250 | 8.3 | |
| 3,000 | 140 | 4.6 |
This table highlights the scale differences, with Google and Facebook leading in both MAU and ads revenue, while Quora and Stack Exchange are smaller in revenue despite significant user bases.
Assumption: Reddit efficiency on placing ads will be the same as Facebook has now, i.e. it makes 4.6 billion per million MAU.
⇒ 4.6 / 1.26 = 3.6 times more revenue
⇒ 1.18B * 3.6 = 4.25 B revenue
If we set a forward PE ratio of 10 with a 30% operating profit (whereby META has above 40%)
⇒ 4.25 B * 0.3 = 1,27 B operating margin
⇒ Conservative Market Cap = 10 * 1,27 B = 12,7 B
This is just based on current users, but of course it’s quite reasonable to assume some growth. Let’s stay conservative and assume a 5% annual growth within a period of 10 years from now corresponds to a 62% increase, which would lead to 20 B Market Cap.
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