The Market News Reel for this week! Get the most important market news & updates for the week ahead each Monday!
Major headlines, excerpts from news sources and a link to the full article are shown below. "Breaking Thoughts" section is purely our opinion.
Reddit Files for IPO, rumored $15 Billion Valuation
"The San Francisco-based company filed confidentially this week with U.S. regulators for an initial public offering (IPO). It is aiming for a valuation of at least $15 billion, Reuters reported in September.
Reddit co-founder and Chief Executive Steve Huffman is hoping that retail investors will play a big role in the stock market debut. "I want our users to be shareholders and I want our shareholders to be users," he told an audience at the Wall Street Journal's Tech Live conference in October.
At a $15 billion valuation, Reddit would be valued at 20-times revenue, or three times the multiple of Facebook-owner Meta Platforms, according to Breakingviews.
That is despite the 16-year-old company significantly trailing Facebook and other major social media companies in users and revenue.
Reddit brought in $100 million in advertising revenue in the second quarter of this year, according to the company. That reflects a tripling from a year ago, or about $400 million annually on a run-rate basis, serving about 52 million users daily.
Facebook, which was founded just a year before Reddit, generated $85.9 billion in 2020 and serves about 3 billion global users." - read more on Reuters here
Breaking Thoughts: Reddit is the last of the most popular global social networks to go public (Facebook, Google, Microsoft, Twitter, Yandex, Baidu, Snapchat, Pintrest, Match, Bumble, & Zoom). Both its valuation and its results only highlight the complete dominance of Facebook & Google.
Simply, for the last few years Facebook has often traded at a forward P/E ex-cash of less than 20 due to political/regulatory concerns. Regardless, that is value stock territory for a globally dominant, highly profitable, fast growing, $85B revenue company. Google has similar dominance but slower growth and at higher valuations (higher PE etc.).
Its extremely hard to compete against these companies for ad dollars but with Facebook switching focus to AR/VR as "Meta" perhaps there is a wider opening for Reddit to grow. As for investors, based on growth prospects, profitability, and value it would be hard sell to choose almost any social media co over Facebook or Google.
Major Earnings This Week
Monday December 20:
Micron Technology (MU): Expected Q1 earnings of $2.11 per share
Nike (NKE): Expected Q2 earnings of $0.63 per share
Tuesday December 21:
BlackBerry (BB): Expected Q3 earnings of $-0.07 per share
Factset Research Systems (BDS): Expected Q1 earnings of $3.00 per share
General Mills (GIS): Expected Q2 earnings of $1.05 per share
Wednesday December 22:
CarMax (KMX): Expected Q3 earnings of $1.46 per share
Cintas (CTAS): Expected Q2 earnings of $2.64 per share
Paychex (PAYX): Expected Q2 earnings of $0.80 per share
Major IPOs Expected This Week
none
See you next week!
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