Reddit is undervalued relative to its high growth rate and improving advertising/AI monetization; the speaker views it as a compelling buy despite not being a user himself.

First, I look at " Reddit". Its symbol on the stock exchange is RDDT. It is an application that allows users to share their personal experiences or simply their thoughts on the platform.

Through it, people can find communities and things like that .

This is a company with a market value of $28 billion. To begin with, it has $2.8 billion in cash. So, 10% of its market value in cash, that's not a bad starting point .

Moreover, it is a profitable company. It doesn't take much to run a business like this. Therefore, it generates a lot of profit and free cash flow. If you look at its free cash flow , where it trades at 29 times free cash flow, that's not necessarily a stellar deal until you look at its growth rate, which we'll talk about shortly.

But when you look at the forward price-to-earnings ratio , it is only 19 times the expected earnings . This is where the value proposition truly begins to prove its effectiveness.

One of the things they 've done really well at is that they are actually one of the elements that underpin artificial intelligence today.

And they pay for it, don't they? Will this be something that motivates them in the future? As I understand it, it's a relatively small percentage of revenue, but they have a lot of power because they have a continuous data loop flowing to them.

It seems that this is something all these AI companies will need .

Well, it's not irrelevant to the investment thesis, certainly. I would argue that this probably won't be the biggest revenue driver in the future. In fact, when you look at this platform, you will find that it has a very large number of daily and monthly active users, and for this user base, it is not financially exploited enough.

This is a platform that advertisers were afraid to use in the past. In fact, the Reddit platform has begun to reach maturity, and has become able to convince its advertising partners that it actually offers real value.

Moreover, it is able to make better use of artificial intelligence to connect its users with what they intend to find. AI-enhanced search is a reality, and Reddit is using it very well.

So, this is what propelled its growth story to a high level of speed. If you look at 2024, you will find that its revenue grew by 62%. This is unbelievable.

Growth accelerated in 2025 to reach 69%. Now, if you look at this year, it is looking at growth of approximately 50% in the next quarter. So, it slows down a bit here in 2026, but I would simply say 50% is actually quite good .

Yes, there comes a moment when growth becomes too rapid to be excessive . There is a business theory that says you don't want to grow too fast because things start to fall apart.

Therefore, I believe that 50% is really the maximum this business can sustain.

I don't think there's anything to worry about regarding 50% growth as long as it doesn't continue to slow down significantly from that. But if you look at 11 times the current backlog of sales , with a projected 50% growth in the next quarter. I mean, this job is much cheaper than it looks.

Yes, I think this is a compelling option, and it's one I've never been able to get past the fact that I simply am not a Reddit user, but I think this is more of a personal issue than a business issue for Reddit.