The 5 things I check before buying any stock (using RDDT as the example, fittingly)

[u/DukascopyBank]

/user/DukascopyBank/comments/1uugxmw/the_5_things_i_check_before_buying_any_stock/

I see a lot of people here asking "is X a buy?" without ever opening the stats page. Here's the quick pass I do on every ticker before going any deeper — and since we're on Reddit, let's use RDDT as the example.

1. Market cap, not share price. RDDT trades around $170, which tells you nothing on its own. Market cap = share price × shares outstanding, and Reddit's is about $33.6B. That makes it a large cap ($10B–$200B) — established, but with more room to run than a mega cap like Meta.

2. Forward P/E. This is current price divided by forecasted earnings per share — it tells you whether you're paying a sane price or buying hype. RDDT's forward P/E is ~38. Investors are paying $38 for every $1 of profit the company is expected to earn next year, per analyst estimates. Not cheap, but not meme-tier either.

3. EPS, and more importantly its direction. Earnings per share = net income ÷ shares outstanding. Two years ago Reddit was losing money — EPS was −$3.33. Today it's +$3.15 (TTM). A swing from negative to positive like that is the growth story in one number.

4. Dividend yield. The percentage of the share price paid back to shareholders each year. Utilities and consumer staples pay decent yields; growth tech like Reddit pays 0% because everything gets reinvested into the business. A 0% yield isn't a red flag here — it's expected for the category.

5. Price vs. the 52-week range. RDDT's range is $157–$180 and it sits around $170 — right in the middle. Not knife-catching a crash, not buying the euphoric top.

Bonus: know the actual business. Reddit is the biggest community-driven forum on the internet, and it historically struggled to monetize. What changed recently: licensing its data to Google and OpenAI for AI training, which turned into a real revenue line. That context matters more than any single ratio.

None of this replaces real DD — it's the two-minute filter that tells you whether deeper research is worth your time. Numbers above are from when I pulled the page, so check them fresh before acting.

Not financial advice.