[ad_1]
Reddit has transformed itself from a somewhat-seedy underground message board to a powerhouse database of mineable information. I reluctantly added this stock to our Active Opps portfolio this morning before publishing this article as a breakout through $230-$250 resistance levels looks to be possible. I’ll describe why I was reluctant at the end of the article. Revenue growth is accelerating as Reddit is not only growing its weekly active users but also turning up the dial on their ad-tech platform. Advertising generated $465 million in revenue in Q2, up 84% year over year, and it is continuing to build out their advertising capabilities. Reddit content is user generated, well-organized and searchable by AI-enabled programs that allow advertisers to target in on their niche markets. On top of that, the advertising on the platform has not been reported to jeopardize the experience. 2024 GAAP EPS was a loss of $3.33 but is expected to move into profitability for 2025 with a gain of $1.87 in 2025 — and then shoot up to $3.08 in 2026. Non-GAAP EPS tells a more bullish story of $2.45 per share 2024, expected $4.03 in 2025 (64.3% growth), forecast $5.08 in 2026 (25.9% growth) and $6.58 expected in 2027 (29.5% growth). Technically speaking, the stock is sniffing a breakout to all-time highs around the $230-$250 zone. What I’m most impressed with is the relative strength of RDDT testing and consolidating around the 20-day moving average shown in light gray on the three occasions I’ve drawn arrows to. Forget about the 50- and 200-day. The 20-day is the more sensitive of the three moving averages but seems to be doing the job of offering support after two weeks or chop and slop around it before buyers step in and push it higher. We’re potentially at the end of 12 trading sessions chopping around the 20-day waiting for buyers to come in and break it away from resistance. I added a 3% position in RDDT today in our Active Opps portfolio for clients of Inside Edge Capital. It seems this company has grown up and has evolved beyond a meme stock message board. I remember in April 2022, I did an on air-interview on “Power Lunch” warning investors to stay away from meme stocks and specifically BBBY on news of a Ryan Cohen activist take over. When I say I was flamed on the Reddit message boards, I’m talking about 800 or more comments of what a terrible person and an event worse investor I must be. The stock dropped more than 90% in the next two years. I wonder what the Reddit boards will say about this bullish outlook? We offer active portfolio management and regular subscriber updates like the idea presented above. -Todd Gordon, Founder of Inside Edge Capital, LLC DISCLOSURES: Gordon owns RDDT personally and in his wealth management company Inside Edge Capital. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
[ad_2]
Source link
