**The Setup: A 33% Crash on Broken Data**
Reddit fell from $282.95 to $189.02 in just over a month.The main culprits being two bad alternative data sources started showing Reddit’s user growth falling off a cliff.
Promptwatch, a startup focused on increasing ai visibility in LLM search showed citations of Reddit plummeting in ChatGPT’s search queries. The same day Reddit fell from $229 to $202.
Similarly, websites that track which links users are clicking on, such as Semrush and Similarweb showed web traffic cratering.
Both started failing on the exact same day: September 9th.
**The Day the Data Broke**
On September 9th, Google made a technical change that made it more difficult for bots and LLMs to pull data. They removed the "&num=100" parameter that allowed bots and analytics tools to pull 100 search results at once.
This change had two major effects:
LLMs couldn't scrape Reddit as easily. ChatGPT and other AI tools that used to pull 100 Google results now get 10, making it look like Reddit mentions disappeared.
Semrush and Similarweb suddenly showed drops across nearly all search dependent websites, not just Reddit.
**What Wall Street is Missing**
Analysts love to use alternative data, especially when it correlates strongly with revenue revenue drivers. For Reddit, the math is simple:
Daily Active Users (DAU) × Average Revenue Per User (ARPU) = Revenue
Web traffic has been an excellent proxy for forecasting DAU because they are heavily correlated. Over 15 quarters, the correlation between web traffic growth and DAU growth was 0.80. So analysts built their models around this relationship.
When web traffic data collapsed in September, they plugged these numbers straight into their models and panicked. Sell side analysts (the professional researchers at investment banks and brokerage firms) now expect quarterly DAU growth of just 3.19%. This is very close to what the web traffic data suggests at 2.95% growth.
But here's the problem: they're using a broken speedometer to measure growth. The September 9th Google change didn't slow Reddit down, it just broke the measurement tools Wall Street depends on. While analysts stare at faulty gauges showing Reddit decelerating, the actual business is ramping up.
**The Real Numbers and Estimate**
While the broken web traffic data suggests doom, other indicators paint a very different picture:
User Growth is Actually Strong
Semrush shows unique visitors (a different metric) growing 8.95% quarter over quarter
Year over year growth comes in at 24.58%
Accelerating Monetization
Reddit has been aggressively hiring salespeople and ad tech engineers
Users on business subreddit are complaining about ad price increases (they're getting priced out by bigger advertisers)
Some can't even reach salespeople anymore. Either there is overwhelming demand or Reddit vastly underhired.
My Forecast
Street Consensus:
Revenue: $546M
DAU: 113M (3% growth)
ARPU: $4.78
My Base Case:
Revenue: $570-600M
DAU: 118-123M (6-9% growth)
ARPU: $5.00-5.25 (10% growth)
The setup here is beautifully asymmetric. Analysts are flying blind with broken instruments while the underlying business accelerates. When reddit reports earnings and shows positive ARPU acceleration this will drive Reddit back toward its old highs.
**Price Target: $250-300 by year end**
**Current position in Robinhood**
\- 140k in calls with strike prices of 230, 250, 300
\- 200k in shares
**Current position in Schwab**
**-** 175k calls with strike prices of 195, 220, 230, and 250
\- 293k in shares