Rapid7, Inc. (RPD): A Bull Case Theory

We came across a bullish thesis on Rapid7, Inc. on Value Investing subreddit by Useful-Strain-7088. In this article, we will summarize the bulls’ thesis on RPD. Rapid7, Inc.'s share was trading at $19.82 as of August 7^th. RPD’s trailing and forward P/E were 48.76 and 10.78, respectively according to Yahoo Finance.

Rapid7 (RPD), a cybersecurity company specializing in vulnerability management and threat detection, is trading near its 52-week low around $20–22, creating what appears to be a mispriced opportunity. The market’s pessimism—driven by decelerating ARR growth (+4% YoY in Q1), a high forward P/E (~58x), insider selling, and a lack of earlier catalysts—has overshadowed the company’s improving fundamentals and emerging growth drivers.

RPD serves ~11,700 customers with ~$71k in ARR per customer and is rolling out high-margin, AI-driven products like Incident Command (automated SIEM) and Active Patching (~99.93% success rate). These offerings, along with FedRAMP-certified InsightGovCloud, position RPD to capture federal cybersecurity spend. Despite recent top-line sluggishness, RPD boasts strong financials: $154M in free cash flow for 2024 (+83% YoY), $172M in operating cash flow, and ~70–74% gross margins (GAAP/non-GAAP).

Activist investor Jana Partners (~5.8% stake) is pushing for board changes, increasing the likelihood of a strategic review or M&A activity. Valuation is compelling—RPD trades at just ~2.4x P/S versus Tenable (~5.2x), Qualys (~8.4x), and Palo Alto (~12x)—with a 13% FCF yield, rare in cybersecurity. If management executes on product growth and federal wins, the stock could re-rate significantly. Near-term catalysts include Q2 earnings (Aug 7), visibility at the Black Hat conference, and potential activist-driven board updates.

With limited downside ($19 support) and upside potential of ~$40 (per DCF), RPD offers an asymmetric setup for long-term investors willing to tolerate near-term volatility. The combination of overlooked product momentum, improving financials, and activist pressure makes this a name to watch closely.

Previously, we covered a bullish thesis on Qualys, Inc. by Na’s Substack in May 2025, which highlighted its strong free cash flow, steady profitability, and expanding product suite. The company’s stock price has appreciated by approximately 2.76% since our coverage. The thesis still stands as Qualys remains a stable cybersecurity leader. Useful-Strain-7088 shares a similar view on Rapid7, but emphasizes activist-driven upside.

Rapid7, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held RPD at the end of the first quarter which was 45 in the previous quarter. While we acknowledge the potential of RPD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.