As per the request i got on the comments section Comment on the original post Bull of the Day: Reddit Inc. (RDDT)

--------------

Post starts with this video : https://www.youtube.com/watch?v=j1-KqlBCo94

Key Takeaways

• At the most recent quarterly earnings report, Reddit grew sales 69% YoY.
• Reddit stock is rebounding strongly after a sharp correction.

Despite a sharp correction in the first quarter, driven largely by indiscriminate selling across SaaS and consumer internet names, Reddit Inc. ((RDDT Quick QuoteRDDT - Free Report) ) continues to execute at a high level and reassert its growth narrative.

The company reported total Daily Active Uniques (DAUq) of 126.8 million for Q1 2026, representing a 17% year-over-year increase, highlighting continued strength in user engagement and platform relevance. Importantly, that engagement is increasingly being monetized. Reddit delivered revenue of $663 million in the quarter, up 69% year-over-year and ahead of analyst expectations, signaling strong demand across its advertising and data licensing initiatives.

This combination of user growth and monetization is driving a meaningful acceleration in fundamentals. Earnings estimates have been moving higher, reflecting improving profitability and operating leverage as the business scales.

From a market perspective, the stock is also showing resilience. After pulling back alongside the broader software complex earlier this year, shares have regained momentum and are now rebounding strongly off their recent lows.

Altogether, Reddit is demonstrating powerful top and bottom-line growth, rising analyst confidence, and improving price action, highlighting a distinct disconnect between business performance and year-to-date stock price. This spread could be investors opportunity.

Image Source: Zacks Investment Research

Reddit Earnings Boost the Stock

Following last week’s strong earnings report, Reddit Inc. has seen a wave of analyst upgrades, and the momentum is well supported by fundamentals. Since its 2024 IPO, the company has consistently outperformed expectations, beating earnings estimates by an average of 67% over the past four quarters.

That track record is now feeding directly into forward estimates and earnings the stock a Zacks Rank #1 (Strong Buy) rating. Over the past week alone, analysts have raised projections across the board, with current year estimates increasing 6.5% and next year forecasts rising 5.3%. This steady upward revision trend reflects growing confidence in Reddit’s ability to sustain both user growth and monetization.

The broader growth profile remains compelling. Sales are projected to increase 47.8% this year and another 31.9% next year, while earnings are expected to climb 61.8% and 40.4%, respectively. That combination of rapid top line expansion and accelerating profitability highlights meaningful operating leverage as the platform scales.

At roughly 40.5x forward earnings, the stock trades at a premium, but one that appears justified given the strength and durability of its growth outlook. In that context, the valuation looks more reflective of sustained execution than excess optimism.

Image Source: Zacks Investment Research

Reddit Shares Gains Momentum

Mirroring much of the sector, Reddit stock spent the past three months consolidating following its earlier-year pullback. That period of weakness has now given way to a more constructive setup, with shares forming a clear base.

The shift in momentum began ahead of earnings, as the stock broke out from its consolidation range, and was reinforced by a strong post-earnings gap higher. That move signaled renewed institutional interest and improving sentiment around the name.

More recently, price action has tightened into a tidy bull flag continuation pattern, a typically bullish formation that reflects orderly consolidation after a strong advance.

If shares can break out decisively from this range, it would likely mark the beginning of the next leg higher and confirm that a new bullish trend is underway.

Image Source: TradingView

Should Investors Buy Shares in RDDT?

Reddit is checking many of the key boxes investors look for in a high-growth stock, with strong user expansion, accelerating monetization, rising earnings estimates and improving price action.

While the valuation remains elevated, it is supported by a durable growth profile and a consistent track record of outperforming expectations. At the same time, the stock appears to be emerging from a multi-month consolidation, suggesting momentum may be turning back in its favor.

For investors comfortable with higher-growth, higher-volatility names, RDDT offers a compelling combination of fundamental strength and technical upside. If the stock can confirm its breakout, it could be poised for another major leg higher.

The legal landscape for Reddit (RDDT) will shift in late May (May 19 to 20). Let me summarize it fast as following:

1. Reddit v. Anthropic Case: CGC-25-625892 (San Francisco State Court)

As we know The case has been officially re-registered in the California Superior Court, a venue historically more protective of platform "Terms of Service" than federal copyright courts.

• A Case Management Conference (CMC) is set for May 20. This is where the judge sets the trial roadmap.
• There is a Deadline for Both parties to file their CM-110 Case Management Statements by May 5.
• We need to be Looking closely at these filings for mentions of ADR (Alternative Dispute Resolution). If Anthropic signals a willingness for mediation, a licensing deal could be on the horizon sooner than expected.
• The Catalyst i see (or expect) here is that Anthropic is widely rumored to be eyeing an IPO. To clear their S-1 filing, they likely need to resolve this "overhang" of litigation. A multi-year licensing settlement (estimated at $100M to $250M+ annually) remains the most logical "out" for them.

Source: Case: CGC25625892 - REDDIT, INC. VS. ANTHROPIC

2. Reddit v. SerpApi, Perplexity, and Oxylabs Case: 1:25-cv-08736 (NY Federal Court)

Lets confirm again that While the Anthropic case is about contract law, the SerpApi case is about "Data Laundering.", Current Status: Opposition Filed. Hearing Scheduled.

• In its April 17 filing, Reddit revealed a "honeypot" sting. They planted (Trap Post) unique, fabricated content invisible to users but detectable by scrapers. When Perplexity’s AI reproduced this specific "trap" content, it proved they were scraping Reddit data indirectly through Google to bypass Reddit’s direct blocks.
• Reddit is using its Anthropic win as "Supplemental Authority" here. They are telling the New York judge that the "Copyright Preemption" defense (the idea that Reddit can't sue for contract breach) has already been rejected by a federal judge in California.
• Judge Engelmayer has scheduled a Motion Hearing for May 19.
• If Reddit wins this hearing, the court will deny the motion to dismiss. This triggers "Discovery," meaning Perplexity and SerpApi would be forced to hand over internal code and Slack logs showing exactly how they coordinated to "launder" Reddit's data.

Source: Case: 1:25-cv-08736 -Reddit vs SerpApi and Oxylabs

At last we Appreciate the efforts of Reddit legal team lead by CLO Lee Benjamin Seong , let us wish them Good luck and achieving the best scenarios we are all looking for.

Following my previous 2026 forecast post Why a $200 Target Happens Even if Growth Slows Down (The Institutional Model) , the data from May 1, 2026 First Quarter 2026 Results, and the new Morningstar report which is just released hours ago along with new analysts ratings today, confirms that what we are witnessing now the official institutional baseline.

1. The Q1 Fundamental Blowout

The market was bracing for a slowdown, but Reddit delivered its seventh straight quarter (read that again!) of top line growth exceeding 60%.

• Revenue Acceleration: Reported $663 million, a 69% year over year increase that shattered high end guidance.
• Profitability Surge: Achieved a massive 31% net income margin ($204 million), with Adjusted EBITDA margins jumping to 40%.
• Cash Flow: Operating cash flow skyrocketed 145% to $312 million.
• Revised EPS Estimate: If Reddit maintains this trajectory, the "Real Estimate" for 2026 EPS moves firmly into the $5.50 to $6.50 range, far above the earlier $3.54 conservative baseline.

2. Wall Street is starting to Catch Up

Wall Street analysts spent the last 24 hours raising targets to match our thesis ( i don't care about them anyway). The "Buy" consensus has shifted aggressively higher.

• New Average Target: The LSEG consensus is now $228.47, representing a 55% upside from current levels.
• Institutional Heavyweights: Needham is targeting $300, Truist is at $265, Morgan Stanley just moved to $240, Citizens $240.00, and Oppenheimer $225.00.
• Morningstar Rating (this post main report): They have reiterated their 4 star rating and $200.00 Fair Value Estimate. Even at current prices, they officially label the stock as Undervalued with a Price/Fair Value of 0.74.

3. The Short Squeeze trap is set perfectly ( i know some of you here hate this word/ topic)

If you have a relative volume tracker, you can see that today the stock started the market regular hours with 9 RV and kept full day near or above 5 RV , that is massive! When a stock of this size trades over 5x its normal volume, it signals a fundamental re-rating of the company's value. The technical "trap" is now fully set for Short sellers who could not close their positions, The 5x RV confirms that the "Volume Void" is wide open. You are no longer looking for a "return to $150."

• Decreasing Float: The short float has dropped from 13% to 12.61% in the last 48 hours as shorts begin to cover, I expect it to drop significantly once Monday data updates
• Liquidity Crunch: Days to Cover has plunged from 5.4 to 3.96. Shorts have significantly less time to exit before the next leg up ,I expect it to drop significantly once Monday data updates
• Institutional Lockdown: Vanguard now holds 7.01 million shares, further reducing the available float for shorts to use.

4. Technical Roadmap: $240 is the New Objective

• Support Floor: The MA 200 ($161.51) and EMA 50 ($164.05) have established a rock solid floor.
• Volume Profile: We have successfully cleared the heavy congestion and moved the "Point of Control" to $165 up from $145 days ago.
• The Void: There is almost no historical resistance between $170 and $190. This "Volume Void" will act as a vacuum once the current consolidation breaks. This vertical separation on high volume usually indicates that sellers have completely stepped out of the way, leaving a "liquidity gap" up to the next psychological level of $180.

Metric	Previous "Institutional" View	The New "Real" Estimate
2026 EPS	$3.54 – $4.02	$5.50 – $6.50
Near-Term Target	$200.00	$225.00 – $240.00
Max Squeeze Target	$225.00	$290.00 – $303.00
Technical Support	$150.00	$161.50 – $165.00

At last let me confirm

Reddit is growing twice as fast as the industry average. The "EPS Growth Story" is now public record; this is massive institutional accumulation before the move to $200+ becomes a reality.

--------------

Some screenshots from the original Morningstar report:

https://preview.redd.it/dfyknlmrjkyg1.png?width=808&format=png&auto=webp&s=eaa6102a226c47d7fb174f3dbca518da681cd884

https://preview.redd.it/dtu813sujkyg1.png?width=804&format=png&auto=webp&s=899462b42ba6e08e49fe500d706f8e963f3a7ea0

https://preview.redd.it/wuwrbr9zjkyg1.png?width=812&format=png&auto=webp&s=3d0301514c00a9317a97469eef1db7d78f746216

https://preview.redd.it/yj2tmtj1kkyg1.png?width=806&format=png&auto=webp&s=c4a90057dd6e3912596f9dce86e22f7ce02cc1af

That is real Marketing here, I see it bullish