Key insights
- The article analyzes Reddit (RDDT) using a 1967 investment framework focusing on explosive fundamentals and confirmed institutional demand. While RDDT shows strong revenue and EPS growth, potentially boosted by AI, its technical chart patterns are not yet confirming institutional interest. The author suggests that if RDDT can break key resistance levels, it could attract a wider range of investors, leading to significant price appreciation. The author holds a position and is awaiting technical confirmation before increasing it.
Most investors see Reddit as either a social media stock, an AI data play, or just another expensive growth story.
But when I ran RDDT through a framework from a largely forgotten 1967 book (Stock Market Blueprints by Edward S. Jensen), I was surprised how many boxes it checked.
The idea was simple: Find companies with explosive fundamentals. Then wait for the chart to confirm institutional demand.
The recent numbers reflect exactly the kind of explosive fundamentals Jensen looked for: 69% YoY revenue growth, EPS jumping from $0.13 to $1.01, Fundamentally, it looks like a market leader in the making. And perhaps the most interesting part: AI could become an additional tailwind, giving Reddit a realistic path to even faster growth going forward.
Technically, though, the picture is still pretty muddy.
My view: If Reddit can continue executing and eventually reclaim key resistance levels (possibly above $190), it could attract a completely different class of investors. Fundamental investors are already in. Then growth investors show up. Then CAN SLIM traders. (Their trading approach is very similar to Edward Jensen) The momentum funds.
Eventually everyone is trying to squeeze through the same narrow doorway at the same time.That’s the bottleneck where things get interesting.
Full disclosure: I established a position back in May. Right now, I’m watching the daily candles closely. I want to see the chart actually confirm this fundamental strength before I consider pyramiding further into the trade.
Am I early, or am I completely wrong?