I've been making money on RDDT for a while now via options, and naturally decided the responsible thing to do was buy even more of it (both shares and calls!)
Current positions:
- 32,000 shares: $4.92M
- 220 x Nov $130 calls: $609k
- 180 x Mar 2027 $100 calls: $1.06M
- 110 x Jan 2028 $135 puts sold (for around $360k in premiums)
- Various other short options
About $6M net in RDDT. Screenshot attached.
Why?
Because I think the market is completely mispricing this company.
- Revenue has increased YoY by over 60% for 8 consecutive quarters
- Gross margins around 91%
- EBITDA roughly doubled
- Around $2.8 billion in cash and the stock is sitting around $154
- Forward PE around 24 with a PEG around 0.7
- Almost no dilution due to buybacks (fully diluted share count increased just 0.2% YoY)
- FCF that's growing rapidly (Q2 FCF grew 135% to $261M)
- 6 times the user growth rate of META
- Almost zero capex requirements
They're still nowhere close to fully monetizing their international audience. International ARPU is just $2.26 compared to $11.85 in the US. Advertising keeps improving, and earnings have the potential to grow considerably faster than users. They don't need explosive user growth to keep putting up impressive numbers. And yes, international ARPU will be significantly lower than US ARPU, but there's still a lot of growth left there!
What about the AI data licensing deals? Those are icing on the cake. RDDT has been generating this insane growth (and margins) without the existing deals contributing much. Last quarter revenue was over $800 million, with AI licensing accounting for less than 5% of it. Even losing those deals wouldn't put much of a dent in revenue. But if they sign some major new licensing agreements, I don't think the market is assigning much value to that potential upside right now.
I genuinely think this has a shot at getting to $1,000/share if they keep executing. No idea how long that'll take, but I think the next earnings report could be the catalyst that finally gets the stock moving again.
Maybe I'm wrong and I lose a few million. Wouldn't be my first bad trade.
But I'm willing to put my money where my mouth is.
TL;DR: $6M+ says Reddit is worth a hell of a lot more than $154/share. Positions attached. Roast away.