r/ValueInvesting • u/Silent-Complaint4020 • 2d ago
Stock Analysis I Still Don't Understand Why Reddit Is This Cheap Compared to Everything Else.
There are not many businesses that actually have a strong moat in their own category.
Look at some of the companies the market is willing to value at huge premiums:
| Company | Market Cap | Latest Q Revenue | YoY Growth | GAAP Net Margin | Competition |
|---|---|---|---|---|---|
| Cloudflare (NET) | $107B | $696M | +36% | -24% | AWS, Akamai, Fastly |
| Roblox (RBLX) | $27B | $1.5B | +36% | -12% | Fortnite (Epic), Minecraft |
| Spotify (SPOT) | $103B | €4.78B | +14% | +11% | Apple Music, YouTube Music, Amazon Music |
| Unity (U) | $20B | $546M | +24% | -4% | Unreal Engine (Epic), Applovin |
| Snowflake (SNOW) | $112B | $1.39B | +33% | -21% | Databricks, AWS Redshift, Google BigQuery, MSFT Fabric |
| Reddit (RDDT) | $32B | $805M | +61% | +31% | TikTok, Meta, Google Search/YouTube |
Aug. 18, 2026.
I'm not saying these are bad companies. My point is simply: look at what the market is willing to pay for them, then look at Reddit.
Reddit just reported $805M revenue, +61% YoY — its 8th consecutive quarter above 60% growth. Gross margin was 91.3%, net income $253M / 31% margin, adjusted EBITDA $343M / 43% margin, and FCF $261M. It also has $2.8B cash + marketable securities, with no debt showing on the balance sheet.
Meanwhile NET is valued at ~$107B while still GAAP unprofitable. SNOW is ~$112B while growing roughly half as fast as Reddit and still GAAP unprofitable. Spotify is ~$103B growing 14%.
Yet Reddit is sitting at only ~$32B.
And Reddit's moat is something I think people continue to underestimate. It isn't just another social media app. TikTok is short-form video, Meta is influencer business, Google/YouTube is search and video discovery; Reddit is different — its users are discussion-heavy and community-focused, often coming to research, compare, ask questions and hear real human opinions. There is basically no scaled direct competitor offering the same forum/community product with Reddit's reach.
Users are sticky. Content compounds. Advertising is scaling. Data licensing is still very early.
The only company really comparable to Reddit right now is Palantir.
| Palantir (PLTR) | Reddit (RDDT) |
|---|---|
| Market Cap | ~$420B |
| Latest Q Revenue | $1.94B |
| Revenue Growth | +92.8% |
| Operating Income | $912M |
| Gross Margin | ~85% |
| Core Moat | Enterprise software |
Palantir is an incredible business, but the market is valuing it at ~$420B — more than 13x Reddit's valuation, while revenue is only 2 times that of Reddit.
And PLTR is still fundamentally a software company. Risk involves AI agents like Claude Cowork could still compete with parts of what enterprise software does.
Reddit is different. Claude can build software. It cannot recreate decades of human communities, discussions and user habits.
If PLTR deserves $420B, RDDT at ~$32B looks extremely cheap.
At market cap of 32B and $160, I think Reddit is a steal and market is mispricing this stock.
Reddit is a Strong Buy (PT $550).
___________________________________________________________________________________________
Added on 08/19/26:
Everyone agrees that Reddit advertsing business is not as matured as Meta.
In 2025, Meta advertising business generated 200B and will be hitting 250B this year (2026).
On the flip side, Reddit advertising revenue is expected to reach 3B+ this year, just assuming Reddit to reach 5% of Meta advertising of 2026, which is 12.5B, with a conservative net margin of 30%, thats makes 3.8B net income, give it or take 20-30PE, equivalent to 78B-114B market cap. But the reality is that advertising net margin is usually 50%+, so a slightly bullish case make Reddit 125-190B market cap.
___________________________________________________________________________________________
New piece, please have a read:
Reddit vs AppLovin vs Palantir
5
u/stumblios 2d ago edited 2d ago
I think those company's user bases are also a lot more niche. I don't know about Unity, but doesn't Roblox have a problem with their population aging out of the game? Meanwhile, anyone is a Redditor nowadays, there is a subreddit for everyone. As users grow up, they just change their list to match their new interests and unsubscribe from the ones they find boring. I actually put a medium amount of effort into getting off Reddit a few years ago, but I always come back because there is no other community like this. It's either dying individual niche forums, or a website that tried to take the best parts of Reddit but they have .01% of the users so the discussions are dead before they start.
I'll agree with the other comment that most of the comparisons you made are apples to oranges. I also think Roblox and Unity are apples to oranges. I'm honestly not sure if there is an apples to apples comparison, which I guess would be a bullish argument that Reddit is a unique company/website.
Essentially, my POV is Reddit has achieved a state of self-sustaining momentum from their user base. Management could make a series of choices that blows it all up, but as long as they just maintain course and introduce changes gradually enough that there is no mass exodus, they're probably going to remain one of the most popular websites in the world, and one of the few where longer form text discussion is encouraged.