BUY HEAVY! This 1 Stock Could 3X Your Money

This one stock is in exactly the same situation as Campbell when I recommended it in May and made a 366% return in just two weeks. Now it's happening again with a stock that crashed 20% Friday into deep value territory with two giant upside catalyst coming in less than 2 months. I'm going to show you why shares of Reddit, ticker RDDT, could jump back up past $200 a share within the next two months and how to leverage it into three times your money fast. Here we can see that giant crash on Friday down almost 21% down 38% for the year on issues we'll talk about but a big crash on earnings even though it beat with higher earnings than forecasted 61% revenue growth. This is a company that even with the issues we'll talk about is expected to post 52% revenue growth this year. That's 52% revenue growth to 3.36 billion from 2.2 billion last year. And what is really impressive here is this earnings growth. Not only 52% revenue growth, but 103% earnings growth from $262 a share to $5.33 a share expected this year. 103% earnings growth. That means not only is management doing a great job of growing its topline sales, but it is leveraging that up into double earnings growth. But then this is where we saw the big disappointment in those earnings. US user growth disappointed here, US users decreased 100,000 from the prior quarter. So in just one quarter with management calling out that Google search and the AI taking some of its traffic. Folks, this has been the big fear for Reddit and for a lot of other internet uh internet media and advertising sites is that those AI search results done by Google are going to take a lot of that search traffic. people are getting their questions answered right on Google anymore and not having to go through to Reddit or some of these other sites. Looking deeper into the numbers here, we can see again the big beat on revenue and earnings revenue of $428 million well above the $45 million expected earnings also beating there. We can also see that daily active users, so DAUs actually rose 39% from over from last year to an average of 101 million for the fourth quarter. So against all of these fears that AI is taking some of that traffic and against that slowdown in US traffic, we do see still see that the the site Reddit is still growing its traffic on a global basis and US traffic is still pretty darn good. CEO Huffman did point out Google's algorithm changes. They take place about twice a year. It did hit in this last quarter. It's not the first. It's not going to be the last, folks. the Reddit Reddit shares always see a big hit on some of those algorithm changes that uh kind of reshuffle the search results and the search traffic from that uh from the platform. It primarily affects logged out US users. Uh that was where we saw the big hit 100,000 less US users than the quarter before. But again here folks, Reddit sales jumped 71% in the quarter from 250 million a year ago. Then the company also said its first quarter sales will be between 360 to 370 million. So upgrading that sales forecast from uh average analyst estimate of 358 million for the quarter. But against those forecasts for continued growth, that huge earnings bump expected this year. We do see the stock down 38% this year on the fears that AI will continue to destroy traffic here and the billions in advertising for this company. But nation, this is exactly the kind of investments I learned to watch for as an analyst where the market was wrong on a stock. Now, it's usually not that collective trading of millions of investors is usually pretty close to fair value on a stock with all the public information available. But every once in a while, investors just sell out in fear without looking ahead. And that is where your biggest money is going to be made. That's because besides still very strong growth, profitability, and an upside to fair value, we also see two giant catalysts coming for Reddit just over the next couple of months. First, we got Google paying about $60 million a year since 2024. That was a partnership, the Google parent, Alphabet, that set up with Reddit allows Alphabet to train its AI models. It's the real conversations in more than 100,000 communities on Reddit. Okay, this is Reddit's huge value. Okay, those real time, real life communities that uh have conversations going back and forth. AI models are being trained on those conversations to get better. That deal is up for renewal. Now, the Reddit stock sank 8% back in July when it was rumored that Reddit might be walking away from that partnership, walking away from renewal contract negotiations because Google wouldn't up its price. again estimated that they're paying about $60 million a year to uh be able to train their models, train those AI Google AI models on Reddit uh community forums. That partnership, that contract needs to be renewed before next year. We do see that Reddit and Google are in contract negotiations. Again, big sell-off earlier last month when it was rumored that Reddit was playing hard ball, going to be walking away from that. Of course, they're not going to be. They're just playing hard to get and trying to get more money. Actually, OpenAI is estimated to be paying much more than that, $60 million a year for its own licensing agreement with Reddit. And analyst estimates are for total licensing could be as high as $550 million a year for Reddit. Okay, that would be about four times the current uh the current revenue they collect. And we're probably seeing a much bigger payout from Google. So, right now, again, Google paying about $60 million annually to scrape Reddit to train its own AI models. And we're going to see that number jump in these in these current negotiations when they're finalized. I think that's going to end finalized in the next couple of months here before next year. That is catalyst number one. Catalyst number two is going to be even bigger and will hit within the next two months. We can see here June of last year, Reddit sued Anthropic for illegally using its site to train its own data. So scraping that Reddit site to train its own clawed clawed AI system much in the way that it allows open AI and Google to do at for paying that fee. We see here that Reddit has tried to limit unauthorized scraping of its website. So it took that those measures to try to try to stop this. Wasn't able to has actually tried and failed to reach an agreement with Anthropic much like it does with OpenAI with Google. Anthropic would not reach an agree a agreement with it and continued to scrape its site. We've already seen Anthropic settle a similar lawsuit just last month, settling a 1.5 billion dollar settlement for copyright lawsuit. 3,000 authors claimed that Anthropic was using its books to uh to to scrape those books to learn off those books and train its own AI models. That Reddit's case is even stronger here though with the terms and conditions violation rather than just copyright what we saw here with this case. Why I think Anthropic settles very quickly with Reddit. We saw them file confidentially with the SEC for its IPO in June there. Now, that is a confidential IPO process. Basically, it doesn't have to release its its financials to the public until just before the IPO. It can go on the road show. It can do a lot of the other uh you know IPO uh milestones that it needs to make before issuing shares, but it doesn't have to release um it doesn't have to release numbers and financials just yet. Normally the timeline for that for a confidential IPO filing it's about three or four months at the most. We saw we saw SpaceX file confidentially in I believe it was May and then actually went IPO in early July. So that was about two months here. We're likely looking at anthropic wanting to go IPO in September or October. That means it needs to settle all these big lawsuits. Okay. People are still going to buy Anthropic shares. They're not going to pay quite nearly as much though for a company that is on the cusp of a huge legal battle that could mean billions of dollars in fees. They're going to want to settle this before they go IPO. Clear that kind of uncertainty out of its stock. So, they are going to settle that that Reddit u that that Reddit lawsuit. So, besides just the basic valuation that we're going to work through now, see what a fair value for this stock is. When you clear out all that fear and uncertainty in their shares, what do you think another couple of billion dollars in revenue from a settlement from a new contract with Google? What do you think that's going to do for the value of the shares for investor sentiment and mood for the stock? Advertising is still 94% of revenue and those traffic worries are real. But folks, growth is still very strong here. This stock is sold out on fear plus those two giant catalysts for revenue and less certainty. This stock is going to go higher very soon. Again, we still see 52% revenue growth expected by Wall Street with a little bit slower 31% next year. I believe they go way above that though with this new contract to negotiation with Google. But just this year, $3.36 billion. Again, 103% earnings growth to $5.33 a share. Expected to grow even further, $6.91 next year. But we're going to stay fair value on this year's estimates. It's 3.36 billion in sales, 5.33, $5.33 in earnings. That alone is enough to send the stock back up to maybe 185, even $200. Still conservative. That would be a conservative 35 times PE ratio and just 10 times price to sales. Okay. What you do when you want to value a stock, folks, if you're going to just do basic price valuations, first you look at the earnings. $5.33 per share in uh in earnings expected this year. We can look at see what investors have been trading at or have been paying for it in the past. In the past, investors have been paying as much as $100 or $100 for every dollar of earnings for this stock that this company was generating uh in earnings. Okay? Now, it's all the way down to 32. It's actually down to about 26 times for this year's earnings. So if we take current stock price about $142 divided by that $5.33 in earnings expected trading for just 26 times that means investors are paying just $26 for every dollar in earnings generated by this company. If we can clear out this uncertainty, clear out the fear of the Google renegotiation, clear clear out the fear of the uh the the anthropic lawsuit and get the uh the revenue from those, a lot of the investor mood, the investor sentiment switches back to positive, switches from fear to greed. We send this stock back up to a valuation of even 35 times again, even 35 times that uh that $5.33 in per share earnings for this year. That is $186 per share for this stock. On a price to sales basis, we can see that investors have been willing to pay as much as 23 24 times those sales for this company. Okay, now it's down all the way down to about 10 times very cheap for a stock growing at 52% revenue growth per year. Okay. But even if we take that 3.36 3.36 times 10, okay, a very conservative 10 times price to sales, they should be up closer to 12 14 times at least uh when that uncertainty clears out and when that fear fear clears out. But just that 10 times that is a $33.6 billion company against 27 billion right now. So divided by 27 that is a 24% return times the 142 share price as $176 per share. This stock should go up very quickly to that amount when all this fear and uncertainty clears out. Oh, we can also check the shorts short interest here on the stock. Not very high at about 8.8% shares shorted as a percentage of the outstanding only about 8.8% 9%. Not very high. Not much when you're looking for a short squeeze. But when you do consider about 90% of these shares, so about 90% of all the shares outstanding are owned by insiders, by large institutional investors, the hedge funds, the ETFs that don't trade their stock very frequently. Okay? Those aren't a good supply of uh of shares available. Then you got 9% of the shares sold short. Okay? So investors that think the stock is going down, they've borrowed about 9% of the stock outstanding, sold that into the market. Eventually, they're going to have to buy that back to clear up that that share debt. They're going to have to buy that back up. If these shares do jump up to $160, $170, $180 per share on those negotiations on that settlement, that is going to force these short sellers to show to buy back their shares and could push the stock even higher. Now, against this, we do see analyst targets of $220 per share on average. That is the average of about 22 analysts covering the shares. That alone is a 56% upside here. High to $300 per share, 113% upside by one analyst. Now, we do see the low target here of $142. Even the low target though, right at where the shares are trading at now. So, even the most pessimistic analyst on Wall Street says this stock is not going any lower. So, nation, here you've got a stock that should be higher on any measure of fair value. But again, investors are scared. Scared that AI is going to eat into traffic and revenue. scared that Google negotiations are going to fall apart. Just plain scared. Those two catalysts though, a win with the Google renewal and billions from the anthropic settlement are going to swing that needle back to greed. And and this could easily be $175 or $200 stock very soon. And while that 25% return to $175 isn't bad for a two-month return, there is a better way to play this to invest it that can three times your money. This is exactly what we did with shares of Campbell Soup there in late May, early June. 366 percent return there. And we're going to go here to the options available for Reddit. We can see here you can get options for pretty much any week, any month. We're going to go down here to the October options. Now, that's likely because Anthropic is going to want to settle within the next couple of months to get its IPO through without that uncertainty of a legal drama. Google is also going to be making progress with its negotiations. So, we're likely to see some very good news on both of these driving these shares up by October 16th. You could go a little bit further out to January, maybe even December if you wanted a little less risk. You know, I don't want you to get caught where we haven't quite got that news yet in in October and the stock isn't to our to our prices here. So, you could go out to January. We're going to use those October 16th options, though. What we're going to do, we're going to scroll down here. We're going to say by any stretch of the imagination, this stock should be above $150 per share, likely over $175. But without both of those catalysts, it might not go much more above $175 just yet over the next two months. So what we're going to do, we're going to buy call options for the $150 strike price. Now, that gives us the right to buy shares of goo of Reddit for $150 by the option expiration in October 16th. Okay, we're going to pay about $1425 for those for that right. Okay, this isn't to buy the shares. This is to buy the right to buy the shares. So, you're going to be able to lock in that price of $150 through October 16th for $14.25. It's $14.25. Now, we're going to offset that, though. We're not going to pay all that money. We're going to offset that by collecting $7.75 for these $175 call options. Okay? That's going to give another investor the right to buy those shares from us for $175. Okay? So, we're going to buy it for 150. They're going to buy it from us for 175. So, we're going to offset the price we paid for these, $14.25 minus the $7.75 for a total of $6.50 per share. So, right now, we are paying $6.50 for the right to buy Reddit at 150 and sell it for 175 from now until October 16th. But look at what happens here. We paid $6.50. If those two catalysts come through, which I think at least one of them is going to come through, that's going to send the shares back up to at least 170, 180, even $200. If it goes up past $175, that is worth $25 per share, right? The difference between what we sell at 175 and what we buy at 150. $25 per share. We only paid $6.50 each. That is a 285% return. Almost three times your money there. more than three times your money. It's 3.8 times your money there on that 285% return in less than two months on this investment. Now, I don't want you to think that this is a completely risk-free investment here, folks. Options investing is risky. It's riskier than just buying the stock outright, which would also be a good investment here at max fear in the shares. The the the risk here is that we don't get any news from the settlement from Google here in the next couple of months. the stock doesn't go past 150 and that $6.50 is completely lost. That's the risk you play in options investing. But the risk is well worth it for that three, four times your money. This is actually exactly the kind of investment I recommended in May on those shares of Campbell, buying the $22 call options, selling the $23 calls, an investment that closed out just two weeks later at $366% return. And yes, folks, I know all this options jargon can feel like a foreign language. But isn't a potential 285% return in just a couple of months, more than three times your money, worth a little time to understand how to use these? To help you get started, I'm relaunching my ultimate options course, over three hours of video. 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