Reddit's RDDT Plummets 7.2% Amid Earnings Surge and Volatile Options Activity – What's Next?

Summary
• Reddit (RDDT) plunges 7.21% to $190.20, erasing post-earnings gains amid surging volatility
• Q3 revenue jumps 68% to $585M, net income soars to $163M, yet shares trade below $200
• Options chain sees 118 contracts traded for the 11/14 180P strike, with 176.47% price change ratio
• Sector leader Meta (META) declines 0.91577676%, signaling mixed sentiment in interactive media

Reddit’s stock has swung wildly post-earnings, trading 7.2% lower despite a blockbuster Q3 report. The company’s 68% revenue surge and $163M net income failed to sustain momentum as options activity and technical indicators point to a critical inflection point. With the stock testing its 52-week low of $79.75 and a dynamic PE of 97.19, investors are grappling with whether this is a buying opportunity or a breakdown.

Earnings Optimism Clashes with Technical Downtrend
Reddit’s Q3 results—68% revenue growth, 28% net margin, and $163M net income—were hailed as a triumph, yet shares have cratered 7.2% intraday. The disconnect stems from a confluence of factors: (1) A 52-week high of $282.95 has created a psychological ceiling, (2) the stock’s dynamic PE of 97.19 remains stretched despite earnings growth, and (3) technical indicators like the MACD (-3.76) and RSI (54.53) suggest overbought conditions are unwinding. The 11/14 options chain, with 118 contracts traded for the 180P strike, reflects aggressive bearish positioning as traders bet on a breakdown below $190.

Interactive Media Sector Mixed as Meta Drags
The S&P 500 Interactive Media & Services sector is in flux, with Meta (META) down 0.91577676% despite Reddit’s earnings beat. While Reddit’s ad revenue grew 74% YoY, Meta’s recent guidance has tempered enthusiasm for the sector. The divergence highlights Reddit’s unique exposure to AI-driven data licensing (7% YoY growth in Other revenue) versus Meta’s broader platform challenges. However, Reddit’s 7.2% intraday drop mirrors sector-wide volatility, as investors weigh growth sustainability against valuation multiples.

Options and ETF Plays for RDDT’s Volatile Rebound
• 200-day MA: 165.99 (below) • 100-day MA: 195.90 (below) • RSI: 54.53 (neutral) • MACD: -3.76 (bearish) • Bollinger Bands: 190.36–218.11

Reddit’s technicals suggest a short-term bearish trend but a long-term bullish setup. Key levels to watch: 190.36 (lower Bollinger Band), 204.24 (30-day MA), and 218.11 (upper Bollinger Band). The 11/14 options chain offers two high-conviction plays:

• RDDT20251114P185: Put option with 176.47% price change ratio, 71.31% IV, 27.09% leverage ratio, and 167.72% turnover. Delta of -0.3925 and theta of -0.1045 suggest strong short-term decay and sensitivity to price swings. Ideal for capitalizing on a $185 breakdown.
• RDDT20251114P190: Put option with 132.05% price change ratio, 68.53% IV, 20.96% leverage ratio, and 136,598 turnover. Delta of -0.4781 and theta of -0.0341 indicate moderate decay and directional bias. Best for a $190 support test.

Payoff analysis under a 5% downside (ST = $180.70): RDDT20251114P185 yields $14.70 (K=185) while RDDT20251114P190 yields $9.30 (K=190). Aggressive bears may consider RDDT20251114P185 into a $185 breakdown, while cautious traders could target RDDT20251114P190 for a $190 pivot.

Backtest Reddit Stock Performance
Below is the interactive report of the requested back-test. (Key assumptions and next-step suggestions follow the chart.)Key points & next steps • The module above displays full performance metrics (return, risk, trade distribution) and an interactive equity curve—please explore it for detailed insights. • The test shows an attractive headline return but with considerable drawdown and modest risk-adjusted performance. • Consider experimenting with tighter risk controls (e.g., 5 % stop-loss or dynamic trailing stops) or alternative exit rules (e.g., volatility-based trailing exits) to improve the drawdown profile. • If you’d like deeper event attribution (e.g., separating results by market regime) or adding transaction costs/slippage, let me know—I can rerun the analysis with those refinements.Feel free to review the interactive chart and share any follow-up questions or adjustment requests!

RDDT at Crossroads: Breakdown or Bounce?
Reddit’s 7.2% intraday drop has created a pivotal moment for investors. While Q3 results validate the company’s growth trajectory, technical indicators and options activity suggest near-term volatility. The stock’s 52-week low of $79.75 remains a distant floor, but a breakdown below $190 could trigger a retest of the $188.30 intraday low. Sector leader Meta’s 0.91577676% decline adds caution. Aggressive bulls may target a rebound above $204.24 (30-day MA), while bears should watch for a $185 breakdown. Act now: Short-term traders should prioritize RDDT20251114P185 for a $185 target, while long-term bulls can accumulate dips above $190.