Reddit’s Q3 Earnings Show the Power of ‘Authenticity’

Reddit is an interest-based social community platform where users share user-generated content and ask and answer questions through topic-specific boards called subreddits.

Each subreddit has moderators, and together with users they set the rules of engagement, so each board effectively operates like a small-scale society. In Korea, the closest analogue would be the website DC Inside, but it would be a mistake to assume they function in exactly the same way just because they look similar.

As you would expect from a platform that attracts users and keeps them engaged, the advertising business accounts for most of Reddit’s revenue. Its model is similar to Meta or Twitter (X), and among these, Meta is likely the most advanced in machine-learning-based ad targeting. But because Reddit is fundamentally a community built around “interests,” it can likely deliver strong ad performance even with relatively less sophisticated infrastructure.

What makes Reddit more attractive than Google as a trustworthy source of information is the high share of genuinely “honest” content created by real users who care about and think deeply about the topics they post on. As we discussed in “Why Google Search Is Dying”, more and more people are deliberately filtering for Reddit results to avoid content created purely to sell something or written only for SEO (search engine optimization).

The result is the emergence of an AI training data business. Training large language models naturally requires original content, and Reddit communities are full of people with deep domain knowledge in specific fields. The honest, information-rich content they produce is extremely valuable as training data for AI, and there is a good reason OpenAI and Google are paying Reddit substantial sums.

In an era flooded with AI-generated content, the authentic posts created by real users on Reddit are likely to generate even greater value.

Reddit only recently went public and was loss-making as of last year. Even after its strong share-price run, its current market cap is around $13 billion, so I’ve hardly seen Korean research houses—who mainly cater to investors who like mega-cap tech names like the M6, Tesla, or thematic stocks like NuScale Power—give it meaningful coverage. I don’t mean to disparage them, but it does seem undeniable that we have the strongest U.S. equity research capability in Korea.

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