An analyst upgraded Reddit (RDDT) to a buy rating, citing robust GAAP profitability and accelerating revenue growth. The company reported 70% year-over-year revenue growth. Reddit achieved a 34.7% GAAP net margin.
Management is prioritizing margin expansion over aggressive AI reinvestment to enhance operating leverage. The company maintains a balance sheet with $2.48 billion in cash and no debt. Reddit recently authorized a new $1 billion share repurchase program.
The analyst noted that Reddit's faster growth trajectory and recent insider buying justify its premium valuation compared to industry peers.