GARP InvestingDigital Advertising

Reddit Grew Revenue 69% and Lost Half Its Market Cap: Where I'm Buying

Reddit posted 69% FY2025 revenue growth and $684M FCF while the stock dropped 50% from its high, creating a dislocation buy setup
Gross margin of 91.2% ranks above nearly every ad-supported platform including (META) and (GOOGL), with operating leverage still ramping
New commerce tools including Shopify alpha integration and Collection Ads open a third monetization engine beyond core ads and data licensing
Blended fair value estimate of ~$185 implies roughly 36% upside from the $136 anchor, with staged buy zone between $125 and $160
$2.5B cash, zero debt, $1B buyback authorization, and Altman Z-Score above 50 make bankruptcy risk essentially zero
Five specific invalidation triggers defined

Glenn Ford

Mar 26, 20262:05 PM1320

Reddit (RDDT) dropped 50% from its 52-week high while the business posted 69% full-year revenue growth, turned $530 million in net income, and generated $684 million in free cash flow. The stock is broken. The company is not. That gap is where the opportunity lives, and I think staged buying between $125 and $160 offers one of the better asymmetric setups in internet advertising right now.

The Setup Nobody Wants to Talk About

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