Pinterest down 22% on earnings miss, Reddit trades at 111x PE — diverging narratives in the social media era
Nov 5, 2025
Key Points
- Pinterest crashed 22% on an earnings miss while Reddit trades at 111x forward PE, exposing a widening valuation split that reflects investor disagreement over which social platforms have sustainable moats.
- X's network effects have withstood competitive pressure from Substack, partly because email newsletter integration lets creators port audiences elsewhere, a threat that killed Twitter's own newsletter product years ago.
- Venture capital insiders pushed back on Wall Street Journal criticism of Sequoia's Bird and 23andMe investments as failures, noting that 40% write-off rates are normal in venture and concentrated hits drive returns.
Summary
Pinterest collapsed 22% on an earnings miss while Reddit trades at 111x forward PE, a gap that reflects diverging investor views on which social platforms have sustainable moats. Pinterest's stumble signals weakness in a creator-centric platform once positioned as a secular growth story. Reddit's multiple suggests either euphoria around AI-powered monetization or conviction that user-generated content platforms have finally achieved durable unit economics.
X has maintained surprising resilience against Substack despite competitive pressure and public sparring between the platforms. Substack's email newsletter integration actually repels pure social media players by letting creators port audiences elsewhere. Twitter acquired the newsletter product Review years ago and abandoned it for this reason. Social platforms prize lock-in over portability.
Viral marketing has clear fatigue curves. The AI notetaker Clearly claimed to have cracked the formula for organic virality after going viral for a LeetCode cheating exploit. The first headline sparked outrage. By the third or fourth iteration, saturation sets in and engagement drops. Roy Lee notes that X remains a small village relative to the broader internet. Millions of people have never seen these stunts, so addressable market for viral surprise stays large even as marginal returns per stunt decline.
Sequoia Capital's leadership transition sparked criticism from Wall Street Journal reporter Rolf Winkler, who cited outgoing managing partner Roloff Bota's $300M investment in Bird and $250M in 23andMe as "zeros." Venture insiders pushed back sharply. Bota distributed over $50B while leading Sequoia US since 2017. Any VC fund with a write-off rate below 40% is not taking enough risk. Bird and 23andMe both went public, and Sequoia likely benefited from secondary sales. Legacy financial media often conflates venture risk-taking with recklessness rather than recognizing that J-shaped return curves and concentrated hits are structural features of the asset class.