Edgewood Management LLC - Large Cap Growth Composite on Reddit
Thesis
Edgewood believes Reddit has a significant monetization runway because average revenue per user remains far below Meta and only modestly above several smaller social platforms. Near-term monetization can improve through higher advertising load and search monetization, while a move toward performance advertising provides a more durable opportunity. International users are growing rapidly from a low base, aided by machine-learning translation into dozens of languages, which Edgewood believes can support double-digit blended user growth through 2030. The business already operates with approximately 91% gross margins and around 40% EBITDA margins, with management targeting further operating leverage. Reddit also owns a unique dataset of human discussions that is increasingly valuable to AI models. Existing data-licensing agreements and potential future deals or settlements create additional upside beyond the core advertising business.
“Reddit is becoming core AI infrastructure: it is the single most cited source across the major AI models.”