To The Moon

We have seen $Reddit(RDDT)$ surge by 14% on revenue beat, though they have net loss but that is driven by IPO expenses, first profitable Q1 on an Adjusted EBITDA basis.

I would be more interested in its user acquisition because this is a social media platform. Daily active unique visitors were 82.7 million, up from 60.3 million in the prior year's quarter. Reddit defines a daily active unique as a user that the company can identify with a unique identifier who has visited a page on the Reddit website or opened a Reddit application at least once during a 24-hour period.

This figure has showed us Reddit potential as a social media platform which has gone public. But in this article, I want to look at technical analysis to see if we can trade Reddit now.

Investment From Ark Invest. Why It Is Significant.

Ark Invest’s ETFs ARKF and ARKW bought a combined total of 115,394 shares of Reddit. The transaction amounted to $5.93 million. On 08 May 2024 (Wednesday), Reddit shares closed 4.05% higher at $51.40.

This explains why traders and investors interest and sentiment continue after the earnings result, they are not looking at how much is the revenue, or rather looked at the potential of user base growth.

If we looked closely at the chart below, on 08 May 2024, we could see significant demand volume increasing steadily over some period, and this has helped to push the stock price with a gap up.

Do note that Reddit has formed a declining after that gap up, traders often initiate a short position following a high volume breakdown from lower trend line support in a descending triangle chart pattern.

But in this case we are not seeing any high volume yet, so I would wait and watch for the lower highs and lower lows to be formed, and when MACD signal start to move up.

Most importantly, I would be looking at the KDJ, as currently there is no clear signal of demand coming back. So what could be the possible price target?

Possible Price Target

If we were to look closely at the movement over the last 2 days after Reddit earnings, Reddit is near the price of its before earnings, at $48.14, this could be the potential stop loss.

Currently, it is near $51, and if there is increased demand coming back today (09 May 2024), we might see Reddit hitting near $53.49.

I would be watching the price action closely as I am expecting some interest buying to come back which might give a small Gap Up.

Multi-Time Frame To Confirm The Trend

If we were to use the multi-time frame to confirm the trend, we could be seeing a downward trend now, unless the demand (buying) comes back.

There is a possibility of Reddit going towards, $50.66 and then start to move up, but there will depend if we could see a nice volume build up.

Summary

I personally have been monitoring Reddit after its earnings to find a price target to trade, as much as I forecast, I would think $49 to $50 price range is reasonable for entry but provided that we see enough buy volume.

Appreciate if you could share your thoughts in the comment section whether you think Reddit is a potential trade to look at?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.