Bought more Reddit in the Trading 212 SIPP today. The position has been going well since I opened it, and I'm adding a little more — not because I'm chasing the price up, but because the business keeps getting stronger and my conviction keeps growing along with it.
── What Makes Reddit Different ──
Reddit is not like other social platforms. It's not a place where you follow individuals or influencers — it's a place where you follow topics. Over 100,000 active communities — subreddits — covering everything from personal finance to breadmaking to vintage synthesizer repair. The content is organised around interests, not personalities. That means the network effect is rooted in communities, not celebrities — and communities are stickier than influencers. When an influencer leaves Instagram for a new platform, their followers go with them. When a user leaves Reddit, their subreddits carry on without them.
This structure gives Reddit something no other social platform has at scale: authentic, high-quality, human-generated content organised by topic, moderated by volunteers who genuinely care about the subject matter. It's the reason Google search results so often include 'reddit' at the end of queries — because people have learned that Reddit communities produce better answers than SEO-optimised blog posts. Google noticed this too, and struck a $60 million annual data licensing deal with Reddit to train its AI models on Reddit's corpus of human conversation. That's right — Reddit gets paid for its data by the company whose search results were already sending it traffic.
── The Advertising Turnaround ──
For years, Reddit was a beloved platform with a terrible business. The advertising product was clunky, the targeting was weak, and monetisation lagged far behind the size of the audience. That's changing. Reddit has been investing heavily in its ad platform — better targeting, better measurement, better formats — and the results are showing up in the numbers. Revenue growth has accelerated. Average revenue per user is rising. Advertisers who ignored Reddit for years are starting to pay attention, because the audience is massive (hundreds of millions of monthly active users) and the engagement is deep (users spend hours in specific communities they genuinely care about).
The advertising opportunity is real. Reddit's users self-select into communities around purchase-relevant topics — r/buildapc, r/whatcarshouldIbuy, r/personalfinance, r/skincareaddiction. When someone posts 'what's the best vacuum under £200?' in r/VacuumCleaners, they are actively in the market for a vacuum. That's intent data that most ad platforms would kill for, and it's organic — users generate it voluntarily because they want genuine recommendations from real people, not sponsored content. Reddit's challenge has always been converting that intent into ad revenue. It's finally making progress.
── The Data Licensing Wildcard ──
The Google deal is the headline, but it's not the only data licensing opportunity. Every AI company training large language models needs high-quality, diverse, human-generated text — and Reddit has one of the largest corpora of conversational English on the planet. Billions of posts and comments, spanning every conceivable topic, in multiple languages, with upvotes and downvotes providing a built-in quality signal. That's extremely valuable training data, and AI companies are willing to pay for it.
There's a legitimate debate about whether this data licensing revenue is sustainable over the very long term — will AI companies eventually have enough training data, or will they build their own data pipelines? — but in the medium term, as multiple AI labs compete to build better models, Reddit's data is a competitive asset. And Reddit has been clear that it will charge for access. The Google deal is not exclusive. There's room for more.
── The Risks ──
Reddit is not a mature, predictable business. User growth can stall. Moderators — who are unpaid volunteers — could rebel (and have, in the past, with significant disruption). The advertising business is still relatively early-stage compared to Meta or Google, and there's execution risk in the transition from 'clunky but promising' to 'genuinely competitive.' The stock has run up significantly, and buying after a strong run always carries the risk that you're paying for optimism that may not materialise. And while the data licensing revenue is a nice tailwind, it's not the core thesis — the core thesis is advertising, and advertising is cyclical.
There's also platform risk. Reddit's user base can be... let's say spirited. Content moderation at scale is genuinely hard, and Reddit's commitment to free expression sometimes puts it at odds with advertisers who prefer sanitised environments. Navigating that tension — keeping the community happy while keeping the ad revenue growing — is an ongoing challenge that Meta, with its algorithm-driven feed and professional content moderation, doesn't face to the same degree.
── Adding to a Winner ──
The position has been doing well, and I'm adding to it not because I think it's going to double again next quarter, but because the business keeps getting better and my conviction keeps growing. That's the right reason to size up a position — not price momentum, but business momentum. Reddit's user base is growing. Its ad platform is improving. Its data is uniquely valuable. And the stock, even after a strong run, still represents a business in the relatively early stages of monetising an enormous and deeply engaged audience.
As always: this is what I did with my own money. Not a recommendation. All investing carries risk — you can lose money, and past performance doesn't predict future returns. Reddit (RDDT) carries specific risks including advertising market cyclicality, user growth dependency, content moderation challenges, platform risk, and execution risk in monetisation. US-listed shares carry currency risk for UK investors. Do your own research.