RDDT: The profitable version of the SNAP trajectory?
Honest question. SNAP, the company from which CFO Drew Vollero came:
- Just did double the ad and total revenue of RDDT
- Also has had notorious SBC packages that created dilution
- Also authorized multiple share buybacks
- Again, the CFO now runs RDDT
- has had pitiful share performance for 4 YEARS
- but has only turned a profit in one quarter
Now RDDT:
The RDDT C-Suite keeps harping “ADS, ADS, ADS!” And while they’re doing great and ads is a seriously strong, growing business (like SNAP) with more growth lined up, will it ever make a difference in share price in a meaningful way again?
Many bulls are hopeful for the day RDDT logs $1B quarterly revenue, and beyond. SNAP just did $1.4B in Q1 and posted their lowest % net loss. Their share price couldn’t give a lick. Could this RDDT story be a similar one to SNAP, just the slightly profitable version?
Same CFO, same business model, same SBC program, same buybacks, similar revenue performance (RDDT monetizes about 2x better on a per user basis)….similar future share price story?
A *key difference* is SNAP has only turned a profit in one quarter EVER, but RDDT is being treated like a pre-rev, net loss company anyways. Despite turning solid profits for 1.5 years. So even though RDDT makes money, I think it’s just an evolved variation of perhaps what’s happening at SNAP. Perhaps Drew Vollero evolved his tactics learning what he did at SNAP.
You see SNAP had a parabolic jump from 2020-2021, then slowly started to come down where it started by 2022. It was 1.5 years of crazy share price growth (like RDDT) and by 2022 it had lost all its gains. It’s now sat stagnant for 4 years. They too nearly doubled revenue between 2020 and 2021.
Is this not the fate with RDDT, with the profits substantiating a higher floor share price? The CFO came from SNAP, though he left before the buybacks (as well as the parabolic share price rise).
Even if we execute ads and user growth flawlessly and hit the projections that SNAP already has, can’t our share price not be rewarded, as was SNAPs? SNAP has continued to increase revenue every year and lessen the net loss, market doesn’t care. Reddit has turned a profit for 1.5 years and increase said profit nearly every quarter, market doesn’t care.
I’m a bag holder and believer but can someone convince me, rationally, that this isn’t the RDDT trajectory? It almost seems intentional…..we are the insiders exit liquidity.
Tl;dr
This was never intended to be fetus-META….it was intended to enrich the founders and C-suite by profiting mildly enough to attract enough retail investors to keep the scheme going. It’s the evolved Drew Vollero system. RDDT profits don’t even let it crack the Fortune 500, but the hopium of future growth perpetuates the scheme along with continued dilution.