r/valueinvesting
RDDT is an absolute beast of a company with real catalysts soon to come
RDDT shows 91.5% gross margins, 69% revenue growth, and huge FCF, with AI data deals with Google and OpenAI as key catalysts.
- Exceptional profitability with 91.5% gross margins and 47% FCF margins, scaling with minimal capex.
- Strong top-line growth, with revenue up 69% YoY and advertising revenue up 74%.
- Upcoming AI data licensing deals with Google and OpenAI provide massive leverage due to Reddit's unique data.
Gross margin: 91.5%. That is seven straight quarters above 90%. For every dollar of revenue they keep over 91 cents.
That is software margin most companies only dream of.
Revenue: $663 million last quarter. Up 69% year over year. The seventh consecutive quarter of growth above 60%. Advertising alone grew 74%.
And it scales over almost nothing. Capital expenditures were $1 million. That is 0.2% of revenue. They generated $311 million in free cash flow at a 47% margin while spending basically nothing to do it.
Net income went from $26 million to $204 million in a single year. EPS up over 7x.
The biggest catalysts that could potentially happen this year are the AI licensing deals between Google and open AI. People don’t understand how important RDDTs core data is. it’s massive, human-generated, opinionated, and spans basically every topic. You can’t just scrape that elsewhere at scale. That gives Reddit real leverage.
This combined with ending of the anthropic lawsuit, we can start to see some real momentum and repricing of RDDT within the next coming months
They just did some big announcement on bots. Pretty easy to find.
Pretty soon, they’ll be no place left
I worry with leaps due to time expiration, what if the target strike price isn't met in the desired duration?
you don't have to hold till expiry. they are traded just like stock. price goes up and price goes down. The strike does not have to be reached to make a profit. (edit for clarity... leaps can be somewhat illiquid compared to stocks, so understanding when it is favorable to buy and sell is more important that stock to get a favorable trade across often wider spreads)
but OF has not buyers because no matter how good of a business it is, funds won't touch it.
It definitely can, they’re just building out their advertising platform
Not at all
Cosmo’s flipping that horse betting money on to Reddit calls for sure
Rioted, for Jan 6th apologists, look for the AutoGulp app on Bitcoin.
I’ve never clicked on an ad on anything. Not on Facebook. Honestly I have no idea how ads generate money. But that’s not reddit exclusive.
Yea but they don’t get exclusive licensing deal from AI labs to train models on their data
explain
Is being up 200% over the past two years not “breaking out” to you? Lol
just talking about current range it has been trading in, not everyone got in the first time around or wanted to invest in a company that didn't have solid fundamentals... this is r/ValueInvesting, bro... so try and remember that context is everything. Specifically i'm talking about breaking above the 50sma on the the weekly timeframe. That level is around 190 rn. We could potentially breakout (of the current range) tomorrow.
So a modern Playboy. Got it 👍🏽
I’m only here for the articles