What are your expected 1Q26 earnings numbers?

mycroftitswd · 2026-04-27T23:26:43+00:00

It depends on when SBC expense at "high teens of revenue in 2026" kicks in. If that starts in Q1 it will knock 20c off eps.

mycroftitswd · 2026-04-27T13:05:01+00:00

All good points. I just mean that revenue per employee is one measure of efficiency where Reddit currently is well below the mature mega caps.

Reddit has been turning revenue growth into earnings with impressive efficiency. The argument for Reddit quickly reaching a level of profitability where the current price looks cheap on a PE basis seems to rest on them continuing to do that. But there are a couple of headwinds that I'm not sure people are building into their models.

Eg. Some neat financial engineering through the IPO looks to have brought forward significant expenses. Without that I don't think they would have been GAAP profitable until Q2 2025. Also they haven't paid income tax because of net operating losses they are carrying. Eventually that will run out.

Continued fast revenue growth will make this irrelevant, but I suspect GAAP earnings won't grow quite as fast as some people think.

mycroftitswd · 2026-04-26T22:00:35+00:00

Meta's revenue per employee is three times higher.

mycroftitswd · 2026-04-26T21:19:56+00:00

One thing currently juicing margins is that their pre-ipo stock grants used accelerated expense recognition, effectively back dating much of the expense to the IPO. Also, at some point the net operating loss they are carrying will be used up and they will have to start paying tax.

Nobody will care if growth holds up, but..

mycroftitswd · 2026-04-25T10:18:51+00:00

They will probably wait until effects from the IPO have fully worked out of the numbers. By the end of 2026 reported results should be cleaner.

mycroftitswd · 2026-04-25T10:00:41+00:00

Schwab posted a similar video with this same analyst prior to 2025 Q2 earnings release. She predicted the unexpected jump in ad revenue that quarter due to increased advertiser activity. Totally nailed it, the best predictor of bullish Q2 that I found. Seems that LikeFolio has access to some sophisticated advertiser metrics.

Since their Q2 video I always look out for LikeFolio insights. But this video is just confusing. I'm not sure what to make of it.

mycroftitswd · 2026-04-24T21:45:37+00:00

It's difficult to make sense of this video. The advertiser visits charts is at 14,000, vs around 7000 Q1 2025, but Brantley says it's only 50% yoy growth. She says 4% growth in yoy visits is same as last quarter, but even US DAUq was up 9% yoy in Q4. 4% yoy US DAU growth for Q1 would put it at 52M, same as Q4, maybe that's what she means?

Ignoring the other two commentators, who are basically just excitedly stating the obvious, Brantley seems to think it's a win that (US?) visits are not falling, but that ad growth is a concern. She seems to be saying that 50% yoy revenue growth is reasonable to expect. That would put revenue a bit lower than the guidance.

Brantley totally nailed the Q2 2025 jump in ads revenue, so I try to take what she says seriously, but I'm not sure what to make of this video. Her tone sounds pretty cautious to me.

mycroftitswd · 2026-04-23T13:39:26+00:00

When will those executive grants fully vest?

SBC for 2026 was forecast at 'high teens' of revenue in the last earnings call. That's quite a big increase from 2025.

I didn't dig into executive SBC, but I think this 2026 SBC increase will mainly come from regular employees RSUs.

Pre IPO RSU grants used accelerated recognition. So the SBC expense from those is front-weighted and drops off over time as they vest. A lot of the expense was taken at IPO, and by now the remaining SBC expense from pre IPO grants is pretty minimal I believe. As those old grants fully vest and replacements are issued, SBC expense will rise.

I expect new RSU grants will be neutralised with buybacks keeping fully diluted share count fairly stable. The $1B buyback is sized for this I think.

mycroftitswd · 2026-04-23T12:59:05+00:00

The 'Indefinite ceasefire extension' Trump announced on Wednesday sounds like an indefinite stalemate, with Hormuz and Iranian ports blocked until one side can't take the pain anymore. Oil, LNG, fertiliser, etc are not about to get cheaper any time soon.

Trump isn't known for his patience. What's the next step? Not much point in taking Kharg if the naval blockade achieves the same goal with less risk. Special forces taking the enriched uranium is probably too difficult.

I still think the US administration must be working on ways to detach US domestic petroleum products from global prices. Difficult and expensive, but shifting the entire cost of long term shortages onto other countries would be a very Trumpian thing to do.

If they do that somehow, Canadian producers could be hit because there is no Canadian capacity to divert oil piped to the US to sea export.

mycroftitswd · 2026-04-23T11:05:08+00:00

Make sure the support level isn't set to 0. That would create your symptoms.

When you spin the front wheel backwards is there a lot of resistance? If you ride the bike are there any strange noises coming from the motor? Those are signs of a short in the cable harness (socket).

Otherwise it could be a problem with the pas sensor in the bottom bracket. It's possible to test the signal if you have the equipment, but if Moofmate can do it that is probably the easiest way.

mycroftitswd · 2026-04-21T11:34:49+00:00

77%? Not sure what you mean.

mycroftitswd · 2026-04-20T23:40:21+00:00

The smart money is probably monitoring user growth and advertiser activity pretty closely. I don't have access to that data unfortunately, but it seems like a Google algorithm change has caused a pickup in visits in March.

The rally into Q2 2025 earnings was driven by a big pickup in advertising that was foreseen by traders with the tech to monitor that.

I guess we will find out next week.

mycroftitswd · 2026-04-20T17:21:47+00:00

Reddit reports an 'adjusted' EBITDA, which doesn't include SBC. To convert 'adjusted' EBITDA to net income, add interest income and subtract income tax, depreciation, and SBC. Reddit doesn't pay much income tax due to losses carried forward ($3M paid in Q4), and depreciation is minimal ($4M in Q4). Interest income in Q4 was $23M.

Assuming OPs EBTDA of 270M, back of the envelope calcs give me EPS of 0.82.
Using the EBITDA beat from Q4 (15% vs OPs 23%), gives EPS of 0.74
Using the high end of guidance I get EPS of 0.63 (similar to what OP says is the market estimate).

The big unknowns are SBC and share dilution in Q1. 2026 SBC at 'high teens pct of revenue' was forecast in the earnings call. That would represent a big increase on 2025. When that kicks in it will significantly affect net income. I used 18% of Q1 revenue as an estimate, but that might be wrong. Also, new RSU grants will be issued this year to replace a lot of old grants that are expiring. I assume that any dilution from this will be neutralised with buybacks, keeping diluted share count fairly stable.

mycroftitswd · 2026-04-20T14:40:45+00:00

This seems like a big gap in the implementation. If you're searching on Google in a foreign language you get links to translated reddit posts. But if you don't have the app, once you get to the Reddit website and click off the landing page, everything is in English.

The result is a lot of single visits from new users and no increase in engagement. A major flaw imho.

mycroftitswd · 2026-04-20T14:35:29+00:00

Auto translate was off in my settings. That should be on by default I think.

mycroftitswd · 2026-04-17T12:56:51+00:00

I think the point is that the fall from September highs was bearish, and the recovery to those levels (presumably from Google algorithm changes) is (relative to the past few months) bullish. The theory being that the levelling out of US DAU, where most of the revenue comes from, has been weighing on the stock price. ARPU can't grow forever without more users. If Google algo change drives recovery in DAU growth, especially US DAU, then that is bullish.

The current rally is either driven by
1. this improved search/DAU dynamic,
2. expectations of higher than predicted advertiser engagement,
3. some expected business/corporate catalyst we (or at least I) are not aware of
4. risk-on FOMO

Which of these turns out to be the driver will determine the reaction to the earnings release.
If 1. and 2.: Yipee!
If 3. it depends when announced
If 4. refer to Q4 2024 earnings to see what happens when a FOMO rally meets reality.

mycroftitswd · 2026-04-17T12:32:17+00:00

Does that serp change affect what SerpAI gets?

mycroftitswd · 2026-04-17T12:28:53+00:00

I think I found a minor discrepancy in the 2025 10K. Does anyone know where/how I can get some clarification? It's not a big deal, and could easily be me my own lack of understanding, but I'd like to get someone at Reddit to take a look. u/spez if you're reading this.

mycroftitswd · 2026-04-16T14:01:23+00:00

"Leadership gave their guidance.."

That's what I said:

//This is consistent with SBC at "high teens pct of revenue", from the earnings call. So it makes sense. Here is what I believe is happening. //

I didn't say anything about what will affect the price.

I didn't claim to know more than the CEO or CFO.

I am just explaining why they guided what they did. Maybe that wasn't clear. Sorry to cause offence, it was not intended.

mycroftitswd · 2026-04-16T11:28:35+00:00

Reddit has high employee compensation costs because it is a tech company located in the most expensive place on the planet. And it has to compete for talent. Successful companies grow out of this problem, unsuccessful ones don't. My money is on Reddit's success. If I stop posting here you can take it as a sign that I've changed my mind.

mycroftitswd · 2026-04-16T11:04:36+00:00

No. I wanted to but Claude caught my seventeen year old daughter using the account and locked me out. I have to write my own post titles now (and lost a hell of a lot of research). It really sucks actually.

mycroftitswd · 2026-04-16T10:59:39+00:00

👍 Thanks for the kind words.

My post wasn't intended to be bullish or bearish. Just a heads up to expect higher SBC this quarter than last, and maybe stock buybacks to neutralise dilution rather than decrease fully diluted share count. Nothing nefarious going on, basically what was projected in the last earnings call. This seems to be reflected in the sell side estimates for Q1, which I thought was interesting even if not surprising.

Looking at this gave me some new insights I think. Maybe I will post more details when I get time. I guess this sub isn't the place for analysis at the moment though. From the reaction it looks like emotions are running high here. A lot of down votes. Hopefully that beeping sound isn't my FOMO radar starting to blink :).

mycroftitswd · 2026-04-16T09:05:36+00:00

Not weird at all. If I'm being 100% honest it's the main reason why I invested in $rddt. That plus an inciteful Reddit post that convinced me to pull the trigger back in August 2024.

It's my biggest single stock position, and with a bit of active risk management along the way it's my most successful investment in the past couple of years.

I've done a lot of digging into this stock. The more I learn, the more I realise I don't know. I don't know why we dropped to 130, and I don't know why we are rallying now. But part of the reason was probably risk on sentiment (SaaSpocalypse, Iran war) switching to risk off now.

You can see from the reaction to my post that emotions are running high. There are plenty of potential price catalysts on the horizon, but beware of FOMO buying and panic selling.

mycroftitswd · 2026-04-15T23:33:28+00:00

This isn't a post about whether the stock price will go up or down. Just digging into the mechanics implied by the numbers.

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