Shares of Reddit Inc (NYSE:RDDT) have surged this morning, after the social media platform posted adjusted second quarter earnings of $0.45, easily ahead of the $0.19 that was expected. The company cited its artificial intelligence (AI)-powered search feature, Reddit Answers, the new brand insights tool, Reddit Insights, and a growing use base as the key drivers behind the earnings beat.
At last glance, RDDT is up 15.06% to trade at $184.78, on track for its best single-session gain since April 9. Out of the gate this morning, the stock hit $192.57, its highest level since February 18. The shares are now up 14.59% year-to-date, bouncing off support at their 40-day moving average.
A short squeeze could be fueling today's gains. Short interest fell by 15% in the most recent reporting period, yet the 19.64 million share sold short account for 16.3% of RDDT's total available float.
With the company surpassing expectations, traders are bullish; 134,000 calls have been placed already today, as opposed to 68,000 calls, volume that's eight times the normal amount. This is a departure from previous options trends. RDDT's 50-day put/call volume ratio of 1.07 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) also ranks higher than 89% of readings from the past year.
The stock has also tended to outperform expectations in recent months, per the Schaeffer's Volatility Scorecard (SVS) of 90 out of 100.
