u/AloneStaff5051

The author contrasts Reddit's $1M capex with Meta's massive spending, implying Meta’s heavy capex is a disadvantage. If investors re-evaluate capital efficiency, Meta’s massive AI capex may be penalized relative to asset-light peers like Reddit. Short META as a relative value trade—favoring RDDT’s model over Meta’s high-investment approach. Meta’s capex may drive long-term AI moat; Reddit’s growth could slow; market may not rotate to efficiency theme.

Reddit spent only $1M in capex while growing revenue 69% YoY to $660M, with 91.5% gross margins, $2.7B cash, and a $1B buyback program. Such capital efficiency and high growth rate are rare; if revenue growth sustains near 60%, the company should command a premium valuation. Long RDDT based on superior unit economics, accelerating revenue, and strong balance sheet relative to peers. Slowing user growth, regulatory pressures on social media, or higher-than-expected future capex to scale AI/content moderation.