Reddit, Inc. Fundamental Analysis (NYSE: RDDT)
Reddit, Inc. Fundamental Analysis (NYSE: RDDT)
Reddit, Inc. (NYSE: RDDT) shows strong financial fundamentals with a PE ratio of 20.38, profit margin of 32.11%, and ROE of 30.57%. The company generates $3.1B in annual revenue with strong year-over-year growth of 69.40%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 94.2/100 based on profitability, valuation, growth, and balance sheet metrics. The A grade reflects excellent fundamentals and strong overall stability.
Fundamental Health Score
We analyze RDDT's fundamental strength across five key dimensions:
Efficiency Score
ExcellentRDDT demonstrates superior asset utilization.
Valuation Score
ExcellentRDDT trades at attractive valuation levels.
Growth Score
ModerateRDDT shows steady but slowing expansion.
Financial Health Score
ExcellentRDDT maintains a strong and stable balance sheet.
Profitability Score
ExcellentRDDT achieves industry-leading margins.
Key Financial Metrics
Is RDDT Expensive or Cheap?
P/E Ratio
RDDT trades at 20.38 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, RDDT's PEG of 0.12 indicates potential undervaluation.
Price to Book
The market values Reddit, Inc. at 5.67 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 21.18 times EBITDA. This signals the market has high growth expectations.
How Well Does RDDT Make Money?
Net Profit Margin
For every $100 in sales, Reddit, Inc. keeps $32.11 as profit after all expenses.
Operating Margin
Core operations generate 29.40 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $30.57 in profit for every $100 of shareholder equity.
ROA
Reddit, Inc. generates $25.03 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Reddit, Inc. generates strong operating cash flow of $1.21B, reflecting robust business health.
Free Cash Flow
Reddit, Inc. generates strong free cash flow of $1.20B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $6.22 in free cash annually.
FCF Yield
RDDT converts 5.87% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
20.38
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.12
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.67
vs 25 benchmark
P/S Ratio
Price to sales ratio
6.59
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.009
vs 25 benchmark
Current Ratio
Current assets to current liabilities
10.80
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.31
vs 25 benchmark
ROA
Return on assets percentage
0.25
vs 25 benchmark
ROCE
Return on capital employed
0.25
vs 25 benchmark
How RDDT Stacks Against Its Sector Peers
| Metric | RDDT Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 20.38 | 18.71 | Neutral |
| ROE | 30.57% | 905.00% | Weak |
| Net Margin | 32.11% | 1010.00% | Weak |
| Debt/Equity | 0.01 | -0.06 (disorted) | Distorted |
| Current Ratio | 10.80 | 1.82 | Strong Liquidity |
| ROA | 25.03% | 295.00% | Weak |
RDDT outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Reddit, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
743.26%
Industry Style: Growth, Technology, Streaming
High GrowthEPS CAGR
884.56%
Industry Style: Growth, Technology, Streaming
High GrowthFCF CAGR
1079.07%
Industry Style: Growth, Technology, Streaming
High Growth