All right.

All right.

What's up you, Jener, Reddit has been public for about the past two weeks a

show, and in that time, they haven't received nearly enough bullying and hate, so we're

here to come and fill that void, or maybe we're here to say that this is the hottest tech investment since invidia since super micro computers or probably more accurately since pincol back in 2019 as that was really the last relevant social media IPO so if they're kind of passing the torch to reddit in that regard we're going to be breaking things down for you guys in just a quick second. You know, we hear at WSO, we might even be uniquely qualifying to comment on Reddit, given that we're both very forms-driven businesses. Now, I myself am barely qualified to tie my own shoes, but still, we're going to do our very best. And in doing so, we're bringing together all of the apes from every corner of degeneracy within financial markets. So we, of course, have our favorite apes here at Wall Street Oasis, and we're also bringing

in all the lovely apes from R-slash Wall Street Betts to join us along for the ride. Like I said, guys, welcome to the five-minute peel here. My name is David. We're going to go ahead and break everything down for you related to Reddit. Do you guys know how this goes already? I'm going to pull my screen here and share what I thought to be some of the most important information to come from the company's S1 and some other sources with question more reliability. But either way, let's go ahead and get started here, get those timers going now. So most important thing to notice is that Reddit today has about a $7.63 billion market cap, down about 24% from its $10 billion market cap assigned in 2021 in private markets.

Revenue has been going strongly in that time.

Margins have been expanding as well.

Look at this 86% margin.

That's ridiculous.

Along with this nearly 55% R&D to revenue ratio, we're going to be talking about that in just a quick second.

But the big problem here is that the company has never once even dreamed of coming close to profitability. So obviously it's a huge problem, given that they've been selling ads since 2006. So it's been 18 years, no profits at all. Now, they do have a super strong balance sheet with the three times cash ratio. And absolutely no debt. And that's why we see no interest expense either. But of course, at the same time, we are seeing a disgusting free cash flow margin. So the company's ability to monetize in terms of earnings, and they give that back to shareholders via free cash flow, has not worked one bit. We'll see if that can change going forward. Now, here's a view of the stock price so far. Obviously, down big here today, but down about 2%, down 30% from this peak or so. but it's been a rocky start. That's pretty much the IPO frenzy going on. So a couple of quick things to break down. Now, Reddit isn't going to report its earnings until mid to late June or so. So that's what we'll actually be able to gauge the market's view of this thing. They'll be looking at revenue growth as well as margins, of course, especially the fact that the company has higher margins than every other social media stock.

But like we said, they suck at monetization, but they're really good at engagement.

So we'll see they'll be able to work this out here.

So let's break down some of the stats that Reddit gave us in their S1.

Now, of course, they did not disclose their MAUs like every other social media company does. This is kind of a standard metric for users on social media sites. Estimated their Reddit has about $1.21 billion. But what they did tell us is that they have 73 million unique daily visitors and about 267 million unique weekly visitors. So that's a good amount of traffic. Now, the company is, of course, the third most trafficked website in the United States as well. But the thing is, a lot of this comes from strong SEO capabilities on Google searches. People are going on to Reddit, but they're not signed in. That means that the company doesn't really know who these people are whatsoever. It's very difficult to get ads in front of these people, like without harvesting and absolutely robbing you of your data like Google and Facebook do. Now you can say things like, oh, I'm in the catfishing forum. So let me go ahead and sell like catfish bait or some shit like that, but you don't get down to that personal level. And that's why we see an ARPU of $3.42. It's a little bit better than Snapchat's 330, but being a little bit better than Snapchat and anything isn't very good. It's nearly half of Pinterest and absolutely disgusting compared to meta. So that's kind of the big thing that we're talking about in terms of engagement and monetization and why they suck so bad, because despite their popularity, they don't know their users. All right, going forward, the company has basically said that they're going to be relying on data licensing. $203 million contract was announced. They'll recognize $66 million in 2024. Now, it's from a large unnamed AI company. Seems a little weird that they're doing this because the X model to me just seems more effective off the top. Why isn't this company developing their own artificial intelligence platform? That would be massively valuable if Reddit was the only place that you could go to get Reddit content. That's exactly what X is doing and it seems to be working out pretty well for them. We don't know why Reddit didn't do so, but that's definitely a big knock against them. Longer time, they want to do a developer platform, basically just building tools so you can build shit on the app itself. A contributor program basically just like the YouTube model where they pay you for driving traffic to Reddit, the commerce ecosystem, think TikTok shop, and the collectible avatars, which is basically just NFTs, which absolutely nobody is going to do it because, you know, I don't know any better form of birth control than owning NFTs. But what we can see is the big problem with Reddit right now is its earnings. Like we said, this company has never generated a profit, but it still has a ridiculous valuation. So this is forward price to earnings. Like I said, this comes with the assumption that they're going to do something that they've never done before, and that is actually make money. So that's a bold assumption in itself, but this thing is wildly overvalued on an earnings

basis. But if we break it down on a user basis, the thing looks pretty undervalued compared

to a lot of the other players in the industry. Meta with a $400 per user market cap, Snapchat

at 2375, and Pinterest at 4709. Reddit is only $6.67. That's about as expensive as your average

Starbucks coffee. So that's what the market

is valuing a reddick user app right now and like we said the big reason for that is because a lot of

reddit's traffic is from the SEO and it's from people that aren't logged in so you can't do

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