Reddit (RDDT) Surges 6.5% on Earnings Rally—Is This the Start of a New Bull Phase?

Summary
• Reddit (RDDT) surges 6.5% intraday to $200.89, breaking above $190 resistance
• Q2 revenue of $500M (+78% YoY) crushes estimates, user growth accelerates 21%
• RSI at 80.91 signals overbought territory, but MACD (7.23) and bullish K-line patterns suggest momentum intact

Reddit’s explosive 6.5% rally on Tuesday has sent shockwaves through the social media sector, with the stock trading at a 12.2% discount to its 52-week high. This surge follows a blockbuster Q2 report showing 78% revenue growth and revised guidance that has Wall Street scrambling to raise price targets. With technical indicators flashing bullish signals and options activity surging, the question is: Is this a short-term pop or the start of a larger breakout?

Earnings Outperformance and Bullish Guidance Drive RDDT's Surge
Reddit’s 6.5% intraday jump to $200.89 is a direct response to its Q2 results, which showed revenue of $500 million (+78% YoY), a 23% beat on estimates, and user growth of 21% to 110.4 million daily active users. The company also raised third-quarter guidance, prompting Morgan Stanley and others to lift price targets. This move follows a 22.1% rally three days prior on the same earnings beat, suggesting the market is treating this as a continuation of a positive narrative rather than a fundamental re-rating. The stock’s 19.2% YTD gain and 12.2% discount to its 52-week high of $225.23 indicate investors see long-term potential despite current overbought conditions.

Social Media Sector Rally Accelerates—RDDT Outpaces META and SOCL
Reddit’s performance outpaces sector peers, with Meta (META) rising 3.13% and the Global X Social Media ETF (SOCL) up 3.19%. The Renaissance IPO ETF (IPO) gained 3.89%, highlighting Reddit’s role as a growth proxy for post-IPO momentum. While the sector is broadly positive, Reddit’s 6.5% move reflects its unique positioning as a high-growth story with a 162.82x P/E ratio, significantly above the sector average. This divergence suggests investors are prioritizing Reddit’s revenue acceleration and user monetization potential over broader market trends.

Options and ETFs to Capitalize on RDDT’s Bullish Momentum
• MACD: 7.23 (bullish crossover), RSI: 80.91 (overbought), 200D MA: 138.39 (below current price)
• Bollinger Bands: $129.40–$169.68 (current price at 74% of upper band)
• Gamma: 0.0252 (high sensitivity to price moves), Theta: -1.49 (accelerating time decay)

Reddit’s technicals point to a continuation pattern, with key support at $145.04 (30D MA) and resistance at $210 (200D MA + 20% retracement). The Renaissance IPO ETF (IPO) and Global X Social Media ETF (SOCL) offer leveraged exposure to Reddit’s sector, with IPO up 3.89% and SOCL up 3.19%.

Top Options:
1. RDDT20250808C200
- Call Option, Strike: $200, Expiry: 2025-08-08
- IV: 66.82% (moderate), Delta: 0.545 (moderate sensitivity), Gamma: 0.0252 (high sensitivity), Theta: -1.49 (accelerating decay), Turnover: $8.03M
- Payoff at 5% upside (210.93): $10.93/share. This contract balances leverage (29.35% ratio) and liquidity, ideal for a 5–7% move.
2. RDDT20250808C202.5
- Call Option, Strike: $202.5, Expiry: 2025-08-08
- IV: 67.40% (moderate), Delta: 0.482 (moderate sensitivity), Gamma: 0.0251 (high sensitivity), Theta: -1.40 (accelerating decay), Turnover: $656K
- Payoff at 5% upside: $8.43/share. Slightly out-of-the-money but offers higher gamma for a sharper move. Best for aggressive bulls expecting a breakout.

Action: Aggressive bulls may consider RDDT20250808C200 into a break above $210, while hedgers could pair it with RDDT20250815P190 for downside protection.

Backtest Reddit Stock Performance
Reddit's (RDDT) stock performance after a 6% intraday surge shows a bullish trend with several key factors supporting the optimistic outlook:1. Earnings Performance and Guidance: Reddit reported earnings of $0.45 per share, surpassing analysts' estimates, and exhibited a significant 77.9% year-over-year revenue increase.2. Technical Indicators: The stock's 5.73% surge has positioned it above critical junctures, including the 200-day moving average and 52-week high, while the Relative Strength Index (RSI) reached overbought levels.3. Options Flow: The options buying strategy, concentrated in at-the-money (ATM) call contracts expiring August 8, suggests continued bullish positioning through the expiration date.Backtesting RDDT's performance after a 6% intraday surge reveals a strong win rate and average returns over various time frames, indicating the strategy's robust performance following the surge: The 3-day win rate is 59.76%, the 10-day win rate is 66.27%, and the 30-day win rate is 76.33%. The average return over 3 days is 1.67%, over 10 days is 5.07%, and over 30 days is 13.78%. The maximum return on day 59 is 25.77%, highlighting the strategy's potential for significant gains.In conclusion, Reddit's (RDDT) stock performance after a 6% intraday surge shows a bullish trend, supported by strong earnings, technical indicators, and options flow. Backtesting reveals robust performance over various time frames, with high win rates and significant average returns.

Reddit’s Bull Run Gains Legs—Position for a $210 Breakout
Reddit’s 6.5% surge is a continuation of a bullish narrative driven by earnings outperformance and sector outperformance. While RSI at 80.91 suggests overbought conditions, the MACD and K-line pattern signal momentum remains intact. Investors should monitor the $210 level (200D MA + 20% retracement) as a critical breakout point. The Renaissance IPO ETF (IPO) rising 3.89% and Meta (META) up 3.13% indicate sector-wide optimism, but Reddit’s unique growth story could see it outpace peers. Watch for $210.93 (5% upside) and $200 support—a break above $210 would validate a new bullish phase.