Everyone knows Software is down. It’s about picking the best ones. So it comes down to AppLovin and Reddit. Don’t ask me how. Just trust!
I’m not investing in a company called AppLovin. It’s already embarrassing talking about being a Reddit investor. What kinda name is AppLovin lmao.
They say invest in stuff you know and I know Reddit better than my Exes clitoris.
We got revenue growing at around 70% a year. EPS growing in the triple digits. The PE is 50 and the forward PE is 35. This shit growing faster than it’s trailing PE!!
The PEG is the god indicator and it’s under .3!! For a company growing around 70%!! You retards probably don’t even know what the PEG is. It’s not about Pegging, sure that’s also amazing, no it’s Price to Earnings Growth! Anything under 1 is considered undervalued. This stock has a beta of 2 yet its PEG isn’t even half of 1. Well tbh that’s for TTM. For future it’s closer to 1 at 1.2, but we will soon go over how bad analyst are at projecting Reddit earnings. Later on.
Ok so you might ask what are the risks? Well pegging comes with a lot of risks but if you mean this stock then very little.
RISKS
Welllll if there’s a recession, then Reddit is screwed. They rely on Ads primarily to make money and companies cut ad budgets the first during recessions.
Management only guided for 44% revenue growth in Q2. I believe they are sandbagging. The previous 7 quarter they beat analysts, which already guide slightly higher than Management. In fact the average EPS beat is around 50%. Yes you read that correctly, avg eps beat is very high and the FWD PE is only 35.. which takes in analyst predictions, which they always easily beat…
The real risks are Google deprioritizing Reddit links. I believe this will not happen. We are in the age of AI now and Google already summarizes everything. Reddit constitutes the largest share of their citations. And people want human opinions most for some reason. If they stopped giving Reddit good citations then Reddit will stop letting Google access its website in the future.
So how does the future look?
ADS ADS ADS
I think Reddit will become a tier 1 ads player along with Google and meta. Google commands highest ad prices bcuz they serve you the perfect ads for what you are looking for. Meta knows you better than you know your wife’s clitoris. So they can target random perfect ads to you.
So why would basement dwelling redditors be as good as those customers? Well we possess both of those. Subreddits are niche communities. And they can be perfectly targeted for the exact type of products suited for those members. So for example, in the ford subreddit, any car marker who wants to target ford fans/customers can set up ads. Now that is a goldmine for said automaker. Chevy would love to advertise to these types of people. Consequently this applies to almost all niches yall regards are into. Hence like Facebook, except we are more authentic here than on Facebook. People aren’t going to talk about depression or hair loss or erectile disfunction on Facebook as they would here.
Ok so then why aren’t we already a tier 1 ads players? Why does Reddit have cheap prices for ads? That’s bcuz Reddit is still new in its monetization journey. Reddit was focused on the core product for most of its history. They intentionally grew slowly and let communities build before finally now monetization the platform.
Now Reddit is focusing on rapid user growth, engagement and advertiser teaching and adoption.
There are low number of advertisers on Reddit bcuz historically they don’t know how to show us degens ads. We would troll the fuck out of them if the Ad wasn’t suited for us. We would post harambe with massive dick pics in the comments etc. But Reddit has done a lot of work teaching and automating to make it easier for advertisers to make Ads tailored for reddit. Now the flywheel is set and the Ad world is learning the potential of high intent communities. Right as Google and meta ad price