TIVP014: Reddit (RDDT): Valuing the Front Page of the Internet w/ Shawn O’Malley & Daniel Mahnke

The Intrinsic Value Podcast - The Investor’s Podcast Network

The Investor's Podcast Network

Investing, Education, Business

4.6 • 593 Ratings

🗓️ 6 April 2025

⏱️ 83 minutes

🔗️ Recording | iTunes | RSS

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Summary

In today’s episode, Shawn O’Malley and Daniel Mahnke break down Reddit (ticker: RDDT), an emerging social media giant. Reddit became profitable for the first time in 2024, and as its user growth accelerates, the company appears to be achieving economies of scale, making it a very promising business. In this episode, you’ll learn why Reddit is such a unique social media platform, how it cultivates community and authenticity, why the company is surprisingly tied to the hype around AI, what Reddit can do to further improve its business quality, plus so much more! Prefer to watch? Click here to watch this episode on YouTube. IN THIS EPISODE, YOU’LL LEARN 00:00 - Intro 02:12 - Why people come to Reddit and why the platform might be very durable. 04:04 - Why Reddit is such a unique social media platform. 30:15 - How the company is tapping into AI models’ demand for data to earn licensing fees. 35:12 - What Reddit is doing to revamp its advertising business. 36:28 - What underpins the symbiotic relationship between Google and Reddit. 51:12 - How Reddit uses language translation to make its content accessible to anyone worldwide. 51:35 - How Reddit can grow internationally. 1:14:50 - What is Reddit’s intrinsic value per share. 1:19:36 - Whether Shawn & Daniel add RDDT to The Intrinsic Value Portfolio. And much, much more! *Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences. BOOKS AND RESOURCES Get smarter about valuing businesses in just a few minutes each week through our newsletter, The Intrinsic Value Newsletter. Join The Investors Podcast’s subreddit. The Quartr blog’s coverage of Reddit’s business model and IPO. Reddit management’s Q4 earnings AMA. Reddit CEO’s interview with the WSJ. Check out our previous Intrinsic Value breakdowns: AutoZone, Alphabet, Ulta, John Deere, and Madison Square Garden Sports. Check out the books mentioned in the podcast here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Browse through all our episodes (complete with transcripts) here. Try Shawn's favorite tool for picking stock winners and managing our portfolios: TIP Finance. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: CFI Education TurboTax Airbnb Connect with Shawn: Twitter | LinkedIn | Email Connect with Daniel: Twitter | LinkedIn | Email HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	Reddit is often described as a hive mind. And if you can harvest that data at scale,
0:04.8	you can get some very powerful real-time insights into the collective intelligence that is the
0:11.4	internet. And as a result, there have been some studies that suggest that Reddit comments can be
0:15.5	good indicators of sentiment around stocks, which I'm sure you might imagine is of interest to a bunch
0:20.4	of hedge funds
0:21.1	and stock traders. And as a result, Reddit recently announced that they're tapping into this
0:24.9	demand for real-time data on what people across Reddit think about certain companies by
0:30.8	partnering with intercontinental exchange to sell data captured from posts on financial
0:36.1	subreddits like the infamous Wall Street bets.
0:43.9	Some of the best investments of the last 15 years have been in big tech companies like
0:49.5	meta, alphabet, and Microsoft. And today, Daniel and I will be discussing a late to arrive,
0:55.1	but emerging social media giant. Reddit has over 100 million daily users on average,
1:01.3	yet its average revenue per user is a small fraction of other social media platforms like
1:06.1	meta, the company behind Facebook and Instagram. Reddit's profitability is inflecting after first becoming
1:12.9	profitable last year, shortly after the company's IPO. And Daniel and I will cover why that is
1:18.3	and why the platform may be positioned to see growth really start to accelerate internationally,
1:23.5	too. Reddit is a speculative business because so much of its future is uncertain. Will their story
1:30.2	look more like meta with all of its success? Or will it be more like Snapchat with its chronic
1:35.2	unprofitability? That is exactly what we will be trying to figure out today. I actually participated
1:41.2	in the IPO and sold out immediately. So it's a company I'm keen to better understand after missing out on the stock's
1:47.4	incredible run over the last year.
1:49.7	A lot of work has been necessary to improve the infrastructure behind Reddit and its
	...

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