After the recent -20% following the latest earnings report I took a second look at Reddit fundamentals and honestly they are incredible. I think that it’s the only somewhat large cap that combines this level of growth together with impeccable balance sheet and returns on capital. Just to give a couple of numbers:
\-91.27% gross margin —> That’s simply INSANE. Think of any other big tech like Meta, Nvidia and Google and they are at least 10% below that figure
\-98 M$ long term assets --> That’s NOTHING. Really reddit is able to generate cash with virtually 0 investment as, differently from other big techs, it doesn’t need/want to do any Capex spending in AI
\-261M$ of FCF —> it’s a breath of fresh air in this environment where most tech companies are going into red spending huge amounts of money on AI.
Of course I am not ignoring the issues they have with Google. Clearly this is a big deal and I somewhat understand the market’s reaction. Imo reddit remains a valid side position. If you are heavy on big techs having reddit that focuses only on profitable capital light growth could probably significantly de risk the portfolio (of course this is not financial advice :p).
Let me know what you think, I am seriously considering to open a small position on Reddit.
figures [source](https://www.insicard.com/stocks/RDDT.US)
