Reddit Is the Most Undervalued Social Media Platform – Here’s the Math

I was curious to deep dive into Facebook, Instagram, and Reddit’s monthly users in terms of monetization. I know Reddit ads have nowhere near the profitability of Facebook and Instagram, but I think that can change.

If Reddit monetized at even half the level of Instagram or Facebook, it would be worth 50-100x more than its current valuation. Here’s the math to prove it.

  1. U.S. & English-Speaking User Base

When it comes to ad revenue, U.S. users matter the most since they generate the highest ARPU (average revenue per user). Here’s how the platforms compare in terms of U.S. and English-speaking users:

• Reddit → ~394M U.S. users / ~500M total English-speaking users

• Instagram → ~140M U.S. users / ~300M total English-speaking users

• Facebook → ~258M U.S. users / ~600M total English-speaking users

Reddit actually has more U.S. users than Instagram. Yet, it makes almost nothing compared to them.

  1. Revenue Per User (ARPU) – The Real Gap

This is where things get interesting.

• Reddit → Global ARPU: ~$2-4 | U.S. ARPU: ~$7-10

• Instagram → Global ARPU: ~$35-40 | U.S. ARPU: $223

• Facebook → Global ARPU: ~$50-60 | U.S. ARPU: $240+

• Instagram and Facebook make 20-30x more per U.S. user than Reddit.

• Reddit has more U.S. users than Instagram but makes a fraction of its revenue.

If Reddit even partially monetized like Instagram, its revenue and valuation would increase dramatically.

  1. What If Reddit Monetized Like Instagram?

Scenario: Reddit Matches Instagram’s U.S. Revenue Per User ($223)

• 394M U.S. users x $223 each = $87.9B in annual revenue

• At a 7-10x revenue multiple, Reddit would be worth $615B-$880B

• Current valuation? $10B-$15B

That’s 60x undervalued compared to Instagram.

Now, even if we take a conservative estimate:

Scenario: Reddit Monetizes at 50% of Instagram ($110 per U.S. user)

• 394M U.S. users x $110 each = $43.3B in revenue

• Valuation at 7-10x revenue = $300B-$450B

• Still 30-40x undervalued.

  1. How Does This Compare to Facebook?

    • Facebook is worth over $1 trillion

    • Reddit’s core English-speaking audience is 50% of Facebook’s U.S. audience

    • If Reddit monetized at even half the level of Facebook, it should be worth $250B-$500B

Conclusion

Reddit Is a MASSIVELY Undervalued Stock

• Reddit has a massive U.S. user base (more than Instagram) but makes almost nothing in comparison.

• If Reddit monetized at even half the level of Instagram or Facebook, it would be worth $300B-$800B.
• At $10B-$15B, it is possibly the most undervalued social media company in the world.

What’s stopping Reddit from monetizing like Instagram? Poor ad tech? Weak sales? Would users even tolerate more ads?

Drop your thoughts!