Reddit IPO breakdown! #reddit #stockmarket
00:00:00.000 | Reddit's S1 is kind of fun.
00:00:02.000 | Let's break it down, everybody.
00:00:03.320 | 2023 revenue, $804 million up 21% year over year.
00:00:07.120 | They're still losing money.
00:00:08.120 | Net loss $91 million in 2023.
00:00:10.320 | Pre-cash flow is negative.
00:00:11.660 | They're kind of bouncing along the breakeven mark,
00:00:14.100 | as you can see there on the chart there.
00:00:15.660 | Daily active unique $76 million up 27% year over year.
00:00:19.160 | Average revenue per user is incredibly low, $3.42.
00:00:23.200 | This was a business that the last couple of years had flatlined
00:00:26.000 | because it was only growing 5% a year in terms of usage.
00:00:29.720 | And then all of a sudden in the last two quarters,
00:00:32.300 | the usage started to climb pretty significantly.
00:00:34.760 | Absent that growth story, it's a really challenged business
00:00:38.120 | because a business without much growth
00:00:39.860 | gets value typically on a multiple of the cash flow
00:00:42.300 | that they're generating, and there's less upside.
00:00:44.500 | For you to make an investment at a $5 billion valuation here,
00:00:47.460 | you've really got to believe that the growth continues
00:00:49.560 | at this rate, and it doesn't revert back
00:00:51.660 | to the mean growth rate of the last couple of years
00:00:53.920 | of basically 5%, which is roughly flatlined.