Reddit, Inc. (NYSE:RDDT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Reddit, Inc. operates a website that organizes digital communities. The US$24b market-cap company posted a loss in its most recent financial year of US$91m and a latest trailing-twelve-month loss of US$537m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Reddit's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Consensus from 17 of the American Interactive Media and Services analysts is that Reddit is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$129m in 2025. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 72%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Reddit's growth isn't the focus of this broad overview, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we'd like to point out is that Reddit has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Reddit to cover in one brief article, but the key fundamentals for the company can all be found in one place – Reddit's company page on Simply Wall St. We've also compiled a list of important factors you should further research:

1. Valuation: What is Reddit worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Reddit is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Reddit's board and the CEO's background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.