Reddit Stock Explodes After Earnings Blowout: Could a Short Squeeze Be Next?
Shares of Reddit Inc. (NYSE: RDDT), a prominent player in the social media sector, surged today following the release of its second-quarter 2025 earnings report. The results exceeded Wall Street expectations by a wide margin, igniting bullish sentiment among retail and institutional investors alike. With strong year-over-year revenue growth and a solid beat on earnings per share (EPS), RDDT is rapidly becoming a stock to watch not only in the social media space but also in the broader AI and tech investment landscape.
Reddit’s Q2 2025 earnings report revealed revenue of $249.8 million, a 34% increase compared to the same quarter last year, significantly surpassing analysts' estimates of $223 million. Even more impressive, adjusted EPS came in at $0.19, handily beating consensus forecasts of $0.08. This marks a pivotal moment for Reddit, which went public earlier this year and has faced skepticism from investors about its ability to effectively monetize its massive user base.
A major catalyst behind the bullish reaction is Reddit’s ongoing push into AI integration and targeted advertising. Management noted a sharp increase in ad revenue, up 39% year-over-year, driven by better data utilization and an enhanced advertiser experience. Reddit is also licensing its content to AI companies, which has opened up new revenue streams and drawn attention from big tech investors seeking exposure to the AI boom.
Investor chatter on platforms like X (formerly Twitter) and Reddit itself highlights rising excitement around a potential short squeeze. As of this week, short interest in RDDT stands at approximately 20% of the float—well above average for tech IPOs. Traders are now speculating whether the surge in volume and bullish momentum could trap short sellers, triggering forced buying and driving the stock even higher.
Reddit’s leadership remains optimistic. CEO Steve Huffman emphasized that the platform’s unique blend of authentic user engagement and niche community targeting gives it an edge over competitors like Meta Platforms (NASDAQ: META), X (privately held), and Snap Inc. (NYSE: SNAP). “We are building a sustainable monetization engine that leverages both community and AI,” Huffman stated during the earnings call.
RDDT stock closed the day up 18%, pushing its market cap above $10 billion. That sharp move comes amid broader strength in tech and communication services stocks, with the Nasdaq Composite also posting gains on optimism about AI-related earnings across the board. Analysts at major firms, including Morgan Stanley and Goldman Sachs, have begun revising their price targets upward, citing Reddit’s monetization progress and unique content ecosystem.
As momentum continues to build, retail traders and Wall Street alike will be closely watching how Reddit handles this next phase of growth. With AI, advertising, and short interest all acting as tailwinds, RDDT may be setting up for a breakout that mirrors the viral trends the platform itself is known for.