Summary

• Reddit offers an attractive risk-reward at current levels, leading me to reiterate my “buy” rating, despite Google Search overhaul concerns.
• RDDT's AI-powered Search and strong ad monetization engine drive robust user and revenue growth, with Q1 FY26 revenue up 69% and ARPU up 44% YoY.
• While Google Search drives 40-50% of Reddit’s traffic, most are low-value 'logged-out' users, limiting monetization risk from potential traffic declines from Google Search updates.
• Consensus upward revisions project 46.5% FY26 revenue growth and 89% EPS growth, with a forward PE of 20.9x and 53% potential upside to average price target.
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Introduction & Investment Thesis

Reddit (RDDT) stock was in the red yesterday, down 5.5% after Google (GOOG) announced a broad overhaul of Search at its I/O 2026 developer conference, which

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of RDDT, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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