Accrued Interest Weekly Cypher: August 3, 2026
Week-in-Review: Netflix Is Quietly Out-Growing YouTube, Universal Is the "NOT-Disney" Option, and the Reddit Bulls Get a Reality Check
Welcome to Volume 7 of the Accrued Interest Weekly Cypher for the week beginning August 3, 2026! Consider this your “in-case-you-missed-it” digest to help you catch up.
Accrued Interest TLDR: Another loaded week around here. Rather than write up all of Alphabet’s Q2-26 release, I pulled out the YouTube numbers and used them to make a point almost nobody is making: Netflix is still growing faster than YouTube’s ad business, and it isn’t close on a trailing basis. On Wednesday I dropped part two of my Comcast series, arguing that Netflix and NBCUniversal eventually end up under the same roof, but not until 2029, and that the most underrated asset in the portfolio is Universal being the “NOT-Disney” option. And today I am putting Reddit on the Accrued Interest radar for the first time, because I think the bulls are badly misreading why the stock got hit after Q2 earnings.
Now, let’s cue the record drop and dive into this week’s cypher.
1. 3 Ways Google’s Q2-26 YouTube Results Show Netflix Is Stronger Than You Think
I wrote 3 Ways Google’s Q2-26 YouTube Results Show Netflix Is Stronger Than You Think because I wanted to address Alphabet’s Q2-26 earnings. Rather than do a full post on the entire release, I specifically wanted to focus on the YouTube component and how what we learned from YouTube informs the way I look at Netflix.
To me, this comparison feels intuitive, because I think both companies are unequivocally the top two global media powerhouses in the world right now, particularly in digital media and streaming.
I think everyone finally understands that YouTube is Netflix’s greatest competitor, but I am perplexed by how rarely I see people make direct financial comparisons between them. In my opinion, Netflix often gets measured against an idealized baseline in people’s heads, a romanticized version of what they think a media company should be.
So in this piece, I decided to analyze YouTube by establishing three core truths:
Netflix is still growing its revenue faster than YouTube.
Netflix is a superior monetization engine compared to YouTube.
YouTube is Netflix’s only comparable peer.
The headline numbers: YouTube ad revenue came in at $11.06 billion, up 12.9% year-over-year. Netflix, the service that “nobody watches,” grew 13.4% in the same quarter. On a trailing-twelve-month basis, Netflix has now out-grown YouTube’s ad business for seven straight quarters, and the size gap has widened from about 6% in early 2024 to roughly 14% today.
If we are going to argue that Netflix’s hyper-growth story is over, I want us to at least be consistent. We need to look at YouTube’s current revenue pacing before deciding that “nobody is watching Netflix,” because that narrative is completely detached from reality.
2. Wednesday’s Deep Dive: Will Netflix Buy NBCUniversal? The Numbers Say Yes, But Not Until 2029
My Wednesday long-form article was the second installment in my ongoing series about Comcast, specifically examining the upcoming spinoff of NBCUniversal. In Will Netflix Buy NBCUniversal? The Numbers Say Yes, But Not Until 2029 I provided a deep dive into what I consider the true crown jewel of the NBCUniversal portfolio: Universal Studios, encompassing both the film studio and its vast IP catalog, which I argue cannot be decoupled from the Universal Studios theme park business.
In some ways, this article was a backdoor appreciation of Universal Studios. A key point I made in the piece (which I recommend reading again in full) is that when you look at how they executed their recent expansions and partnerships, specifically with Nintendo for Super Nintendo World, it demonstrated one of Universal’s greatest strategic advantages:
The most underrated thing about Universal Parks is that they are the “NOT-Disney” option.
There are a lot of media properties that want a physical theme park presence but don’t necessarily want to partner with Disney, which heavily prioritizes its own proprietary ecosystem and IP. Universal’s key advantage over the years has been its ability to partner with rival movie studios and integrate massive third-party IP that it doesn’t own into its parks, generating massive returns. Harry Potter, a Warner Bros. property, is a massive anchor attraction at Universal Studios Orlando. Nintendo, whose long-term investment case I covered in a separate deep dive, is another key partner. The same applies to the Minions, characters from Illumination Studio that are distributed by Universal Pictures.
I want to be clear that this acquisition framework is a high-concept idea tied to tax structuring rules; NBCUniversal realistically cannot be acquired by Netflix (or anyone larger) prior to 2029. This article is my way of setting the stage for a transaction that could play out down the road, but I wanted to put the structural math on your radar today.
3. Reddit: Why I Think the Bulls Are Getting This Wrong
Next, I want to talk about Reddit, a company I haven’t formally covered on Accrued Interest until today. I’ve been active on social channels (both X/Twitter and Substack Notes) explaining to bullish Reddit investors why the stock pulled back following its Q2 earnings release.
First, the setup for anyone who missed it. Reddit’s Q2-26 print was, on the surface, excellent. Revenue of $805 million, up 61% YoY, the eighth straight quarter of growth above 60%. Advertising revenue of $762 million, up 64%. GAAP EPS of $1.25 against roughly $0.95 expected. Adjusted EBITDA of $343 million, a 42.6% margin. Q3 guidance came in above consensus at $860 to $870 million. By almost any conventional measure, that is a great quarter.
And the stock fell about 11% after hours and roughly 21% the following session. That disconnect is the entire story, and it is what I want to talk about.
I want to highlight a few key points that I will flesh out in greater detail in my Wednesday deep dive.
(To keep delivering unique value to our paid community, please consider upgrading your subscription to read the full report on what the Reddit bulls are getting wrong.)
I’m not writing this to troll or criticize anyone. There is no shame in having a stock thesis that doesn’t play out. But if you look at my track record from the first half of the year, short calls are one of my core strengths.
Here is why Reddit shareholders need to pay close attention to the warning signs. While I don’t think the stock is going to zero, I do believe it will underperform and is unlikely to bounce back in the near term.
1.The financials look great. The KPIs are the problem.
I see a lot of writers who are blindly repeating the financials from the earnings report and asking rhetorically, “Why doesn’t everyone see how awesome this is?” Financial momentum looks good, but $RDDT has issues with user growth that can’t be waved away. You have to look at the KPIs, and once you do, I see exactly why investors are cutting the multiple.
I think it is clear that the market doesn’t believe management’s financial guidance is the relevant variable anymore, because of the existential risk from Google search that came up on the call. Management’s own investor letter used the word “choppy” to describe search referrals. That was enough to erase a beat-and-raise.
2. Google giveth, and Google taketh away.
Reddit’s traffic strength is largely a byproduct of algorithmic preferences that Google can modify at will, with zero warning. Reddit’s massive climb in search rankings over the last few years brought in an enormous amount of casual, top-of-funnel traffic. That is not a sustainable moat, but a dependency on Google.
And this is not a theoretical concern that I am inventing. Reddit’s own filings tell you that logged-out users, the ones who arrive from search engines, made up 55% of global DAUq as of early 2025, and that those users spend less time on the site and do not monetize at the same rate as logged-in users.
When I worked in digital media, one of my company’s sites messed up its Google Search and was immediately screwed. It is a very bitter pill to swallow that most people don’t want to admit, but the vast majority of websites, even those with STRONG brand names, exist on the whims of the Google search algorithm.
3. If everything is fine, why pull back on the disclosure?
Reddit is no longer going to disclose the exact metric that shows its Google problem. Buried in the filings is the statement that beginning with the quarter ended September 30, 2026, the company will stop reporting logged-in and logged-out DAUq separately.
That is the single cleanest way an outside investor can see how much of the user base is Google-dependent drop-in traffic versus real, engaged, monetizable Redditors. If everything was fine, why pull back on your reporting?
For context on why that split matters: U.S. logged-in DAUq growth has decelerated from 27% YoY in Q1-24 to 5% by Q4-25. The domestic logged-in base, which is the most valuable cohort Reddit has, is effectively flat. That is the number the disclosure change makes harder to track.
4. Google is in the driver’s seat, and the AI licensing math doesn’t work the way bulls think.
Too many investors ignore the fact that Google is in the driver’s seat here. Without Google search sending traffic, Reddit can’t grow. And Google does not need to pay up for a super expensive licensing deal, because Google search can still scrape a whole lot of data from Reddit either way.
I have also seen many people claim, without evidence, that it is inevitable that Reddit is going to get hundreds of millions of dollars in licensing fees from AI companies for their training data. If that’s true, I have two questions:
Why hasn’t it happened yet?
If it is going to happen, with these models getting smarter and smarter by the day, isn’t Reddit’s leverage slipping away the longer they go without new, revised deals?
5. You cannot hold this valuation without growing the core user base.
It is 1,000% false to claim the current share price can be sustained without growing the core user base. Reddit is too small and too early in its monetization journey to suggest it doesn’t need DAU growth in its largest and most lucrative market, the U.S.
A stock’s forward valuation multiple relies on the promise of future growth. There is a structural ceiling on how many ads Reddit can serve and how far it can push ad pricing. You cannot price your way to infinity on a flat domestic audience.
And let me be blunt about the comp everybody reaches for: Reddit will never command Meta-level ad pricing. Meta is simply a vastly superior product for ad buyers. Furthermore, most digital advertisers prioritize domestic performance, yet Reddit bulls argue the U.S. user base doesn’t need to expand. If you believe that, you should sell the stock now, because Wall Street will not reward a stagnant domestic footprint.
Where that leaves the multiple…
At $140, $RDDT trades at roughly 20x the median 2027 GAAP EPS estimate of $6.90. The P/E multiple has compressed significantly, and I understand the temptation to call that cheap. But investors will not award this stock a premium multiple again until management proves it can consistently grow American users. They have lost institutional trust for now, and trust is rebuilt over quarters, not days.
If readers think I am wrong, please buy the stock in size when markets open today. Seriously, I hope you make money on this! BUT the responsibility is on the bulls to prove the market wrong.
This is just my two cents on Reddit. Be sure to tune in Wednesday for the complete breakdown.
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Relevant tickers: RDDT 0.00%↑ , GOOGL 0.00%↑ , GOOG 0.00%↑ , NFLX 0.00%↑ , CMCSA 0.00%↑ , DIS 0.00%↑ , PSKY 0.00%↑ , WBD 0.00%↑ , META 0.00%↑ , VSNT 0.00%↑
— Accrued Interest
Disclaimer: The information presented in this Substack is for educational purposes and should not be construed as investment advice. Investors should make their own decisions regarding the prospects of any company discussed here, as I am not a registered investment advisor.
You can always reach me at simeon@accruedint.com.
