Reddit, Inc. (RDDT): A Bull Case Theory

We came across a bullish thesis on Reddit, Inc. on The Buyside Guy’s Substack by The Buyside Guy. In this article, we will summarize the bulls’ thesis on RDDT. Reddit, Inc.’s share was trading at $220.06 as of September 2^nd. RDDT’s trailing and forward P/E were 98.24 and 76.92, respectively according to Yahoo Finance.

Since the last earnings, RDDT has regained much of its lost momentum, driven primarily by improving DAU trends and resilient traffic following a dip in April. For high-multiple, momentum-driven stocks like RDDT, buyside expectations largely dictate price movement, making guidance far more impactful than the reported quarter itself. Based on historical performance and guidance analysis, Q2 revenue is expected between $455–$480 million, slightly above the consensus of $425 million but in line with buyside expectations around $450 million.

For Q3, revenue guidance is projected at $496–$520 million, exceeding consensus of $472 million and aligning with the buyside bar of $480–$500 million. EBITDA guidance is anticipated between $163–$182 million versus a $159 million consensus, with the buyside bar at $175–$185 million, indicating room for moderate upside. Daily active users (DAUs) are expected to come in around 110 million, slightly above the 108.9 million consensus, with Q3 growth projected at 3–4% to reach 113 million. Multiple ad checks and historical trends support continued sales acceleration into Q3, although caution remains around management commentary on DAU guidance, which could influence market perception.

Overall, RDDT presents a compelling setup: with the market positioned for short-term caution, any upside surprises in revenue, EBITDA, or DAUs, coupled with disciplined guidance messaging, could trigger a significant rerating, offering an attractive risk/reward opportunity for investors.

Previously we covered a bullish thesis on Reddit, Inc. (RDDT) by mylizard in December 2024, which highlighted untapped profit potential, advertising opportunities, and the need for improved user engagement and bot management. The stock has appreciated around 32% since coverage as momentum and DAU trends improved. The thesis still stands, while The Buyside Guy shares a similar view but emphasizes near-term earnings guidance and revenue catalysts.

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Disclosure: None.