Two expensive-looking stocks that may actually be cheap
u/ekonixlab ·
Reddit — r/ValueInvesting
· May 21, 2026 at 00:54
· ⬆ 18 pts
· 💬 15 comments
| View on Reddit ↗
AI Summary
Summary
Author argues AppLovin (APP) and Reddit (RDDT) appear expensive but are cheap given 59% and 69% YoY revenue growth, respectively, and both are profitable with operating leverage.
Thesis: at ~30x 2026 earnings and ~23x 2027 earnings, these high-growth names offer attractive risk/reward for small positions despite platform and user experience risks.
Quality assessment: reasonable speculation with concrete financial data, but lacks deep competitive or moat analysis; not a comprehensive deep-dive.
Score18
Comments15
Upvote %78%
▶ Full Post Text
I recently opened positions in AppLovin and Reddit. Both look expensive at first glance, but when you compare the valuation to the growth, the setup gets a lot more interesting.
AppLovin just grew revenue 59% YoY, while Reddit grew revenue 69% YoY. Both are already profitable, both have strong operating leverage, and both are still early in their monetization story.
What stands out to me is that both are trading around roughly 30x 2026 earnings and 23x 2027 earnings based on current estimates. For companies growing this fast, that does not seem unreasonable.
The risks are real. AppLovin has Apple/Google platform risk, and Reddit still needs to prove it can scale ads without hurting the user experience. But for small positions, I think both are worth owning here.
AppLovin grew revenue 59% YoY, is profitable, and trades at ~30x 2026E / 23x 2027E earnings. High growth combined with operating leverage makes the forward multiple look reasonable, especially if growth persists. Long AppLovin as a growth-at-a-reasonable-price play in digital advertising. Apple/Google platform changes could disrupt ad targeting; competition from larger ad platforms.
Reddit grew revenue 69% YoY, profitable, and trades at similar forward multiples (~30x 2026E / 23x 2027E). Reddit is still early in ad monetization; operating leverage should expand as user base scales. Long Reddit as an under-monetized social media platform with accelerating revenue. Ad scaling may degrade user experience; competition from TikTok, Meta, etc.
This Reddit post, published May 21, 2026,
features u/ekonixlab
discussing APP, RDDT.
2 trade ideas extracted by AI with direction and confidence scoring.