I’m long on $Reddit(RDDT)$ and really believe in the company’s potential, but I can’t ignore that the current valuation looks way too high.
For context, I originally bought 100 shares at $116 and started selling gradually at $130, $135, and $178. I saw the company’s growth potential, so I bought back at $200, and now I hold 40 shares with a BEP of $159. I plan to buy more in the future because I believe in the long-term vision. My personal (and totally pulled-out-of-my-ass) prediction is that RDDT could reach $100B market cap in 1-3 years and possibly $200B or even $300B by 2030.
That said, looking at the numbers, the current valuation seems excessive. Last quarter, they reported $29.9M in net income, and assuming they keep that up, that’s $119.6M per year. With ~120M shares outstanding, that gives a market cap of ~$35B and a P/E ratio close to 300. Even if net income improves, that’s a crazy high multiple. Expectations are through the roof.
Right now, I’m sitting at $2.5K in realized gains and $2.6K in unrealized gains. I won’t be selling before earnings on Feb 12, and I don’t plan on selling for years. But I do think the market is pricing in a ton of future growth, and even though I regret selling early (because I’d have 2x my initial money by now), that doesn’t change the fact that this valuation looks stretched.
Curious to hear other opinions, are we looking at long-term moon potential or just a temporary hype bubble?
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