The subreddit crowd's perennial battle cry of stocks going "to the moon" is usually worth about as much as the pixels it's written on. But occasionally—just occasionally—the rocket metaphors aren't entirely detached from reality.
Reddit's stock has taken a beating lately. The fall from $280 to $190 happened without any real news driving the nosedive—just the classic momentum trader exodus when the excitement fades and short sellers start circling like sharks smelling chum in the water.
But here's the thing (and I've been watching this space since before Reddit's IPO earlier this year): the upcoming Q3 earnings call on October 30th might actually have some substance behind the inevitable retail investor hype.
Look, social media platforms typically follow a predictable lifecycle. First comes explosive user growth that makes investors salivate, then the plateau that makes them panic, and finally—if the company survives that transition—the monetization phase where the adults in the room start actually running a business instead of just chasing user metrics.
Reddit seems to be threading the needle rather nicely here.
Their daily active users jumped from 91.2 million in Q2 2024 to 110.4 million in Q2 2025—a 21% year-over-year increase. Not bad at all. But the real story? Average revenue per user rocketed (sorry) from $3 to $4.53 in that same period. That's a 51% improvement, which is... well, impressive as hell for a platform many analysts thought would struggle to monetize effectively.
I spoke with several digital marketing directors last week who confirmed what the data suggests—Reddit ad costs have been climbing. One told me they've had to adjust their Q4 budgets specifically because of Reddit's rising CPMs. "It's not Meta expensive yet," they said, "but it's definitely not the bargain it was eighteen months ago."
The SemRush traffic data points to around 9% user growth, potentially pushing DAUs to 120 million for Q3. More intriguing, though, is the October traffic surge. Having covered earnings season for years, that kind of pre-announcement momentum often telegraphs positive forward guidance.
And then there's the AI angle.
Remember when Elon let AI companies slurp up Twitter/X data for free? (What a disaster that turned out to be.) Reddit took the opposite approach—they recognized their content goldmine and quickly monetized access. Their existing deal reportedly brings in about $60 million, but the rumored renegotiation with Google could pump that up to around $200 million annually.
That's not chump change for a company pulling in roughly $500 million per quarter.
What's particularly telling is the gap between analyst consensus and management guidance. Wall Street expects Q3 revenue around $472 million, while Reddit guided to $535-545 million. Companies don't typically guide 13-15% above street estimates unless... well, unless they're pretty damn confident they'll hit those numbers.
If Reddit achieves the conservative case of 112.7 million DAUs at $5 ARPU, we're looking at $563.5 million—a meaningful beat. The bull case? A whopping $654.5 million if they hit 119 million DAUs at $5.50 ARPU.
That would be something, wouldn't it?
The valuation remains rich, mind you. At 13x forward sales, Reddit isn't exactly in the bargain bin. Some of the anticipated earnings beat is probably already baked into the price—explaining the stock's tendency to rise modestly before previous earnings announcements.
(I've watched this pattern play out across social media stocks for years. The smart money usually positions ahead of the retail crowd.)
The options positions disclosed in the original analysis—December 2025 $220 calls and June 2027 $100 calls—seem reasonably balanced. The near-term calls capture potential post-earnings momentum, while the longer-dated in-the-money calls provide leveraged exposure with some downside protection.
Does this mean you should back up the truck tomorrow morning? Probably not. But unlike many of the "MOON" predictions that flood investment forums, this one at least has numbers to back it up.
In my fifteen years covering tech stocks, I've seen plenty of rockets explode on the launchpad. But I've also seen enough successful missions to know when the countdown might actually lead somewhere.
Just remember—in investing as in actual rocketry, the professionals calculate trajectories carefully while amateurs just light fuses and run.
