Reddit, Inc. (NYSE: RDDT) has been on an impressive run, recently achieving a new all-time high and up almost 40% YTD. The question now is whether this momentum and sector outperformance can continue after the stock pulled back nearly 10% from its recent highs and has a growing short interest. 

So, let's take a closer look at some key metrics, technical analysis, upcoming earnings, and overall sentiment to understand the potential trajectory of Reddit's stock in the near-to-mid-term.

Bullish Momentum: Reddit Reaches All-Time High

Reddit's stock has soared nearly 40% year-to-date, with an outstanding 88% surge from its 52-week low set in April. More recently, the stock surpassed its previous post-IPO high of $74.90, reaching a new all-time high (ATH) last week of $76.74. This higher timeframe breakout and price reclaim signals strong bullish momentum.

From a technical analysis perspective, Reddit's chart displays an extremely bullish setup. Shares are consolidating above the previous resistance zone near $70, which has now turned into support. If the stock can continue to hold above this zone, alongside rising moving averages, a breakout above its recent highs might propel the stock above the $80 mark. This consolidation phase is crucial as it demonstrates the stock's ability to sustain its gains and potentially launch another upward move.

Reddit's Earnings as a Stock Catalyst

With earnings on the horizon, it's essential to consider this as a significant factor influencing the stock's momentum. Reddit last posted its earnings data on May 7, 2024. The company reported a loss of $8.19 per share for the quarter, missing analysts' consensus estimates of a $2.34 loss by a substantial margin. However, the business generated $243 million in revenue, surpassing the consensus estimate of $213.99 million and reflecting a 48.4% increase compared to the same quarter last year.

Steve Huffman, Co-Founder and CEO of Reddit commented, "It was a strong start to the year and a milestone quarter for Reddit and our communities as we debuted as a public company. We see this as the beginning of a new chapter as we work towards building the next generation of Reddit."

For the upcoming second quarter, Reddit estimates revenue between $240 million and $255 million and adjusted EBITDA between $0 and $15 million. These figures are well ahead of Wall Street's consensus of $227.5 million, suggesting a positive outlook that could further boost investor confidence.

Analyst Upgrades Reflect Confidence in Reddit's Growth Potential

Analyst sentiment towards Reddit remains bullish, with a Moderate Buy rating based on 16 analyst ratings. Recent actions include Loop Capital boosting its target from $60 to $75 on July 3, Needham & Company LLC raising its target from $63 to $75 in June, and Citigroup increasing its target from $65 to $70 in May while maintaining a buy rating. 

While the bullish momentum and positive analyst actions paint a promising picture, it's important to note the growing bearish sentiment. Short interest in Reddit's stock has increased significantly, with 27.6% of the stock's float, or 8.43 million shares, sold short. This high short interest could catalyze a substantial short squeeze, potentially driving the stock higher if momentum continues and shorts are forced to cover their positions.

Watching Reddit's Momentum: Key Factors to Monitor

Reddit's stock has shown remarkable performance and technical strength, positioning itself for potential further gains. The upcoming earnings report will be a critical factor, with positive expectations potentially driving the stock higher. 

While analysts' upgrades and strong revenue forecasts support the bullish sentiment, the high short interest adds an element of volatility that could amplify any upward movement. Investors should watch closely as earnings season approaches, as it may determine whether Reddit's momentum will continue or if the stock might face new challenges.