![J.P. Morgan projects that index-tracking funds could require 16.7 million shares [methodology not clear]](https://external-preview.redd.it/MWg6xy3-ejzKQuYC7zS25XAP_aXcq9ypndCKtSRbHrs.jpeg?width=140&height=93&auto=webp&s=96e42e8adce744243aa459c0737c0e2adad9b7c3)
Multiple sources quoting JP Morgan estimates of 16.7 million shares.
JPM methodology not shared, so the details are not clear. Overall, this estimate is lower than expected.
Tldr version:
I believe any sells off are going to be minor and going to be countered thru the buyback program which comes alive at the current price range.
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Long version:
Over the past 18 months, I've added ~1300 shares and monitored RDDT price action closely.
Even though, in the long term, financials dictate the price. We all know that in the short term Wallstreet definitely trades RDDT more on sentiment and less on financials.
After Q1 buyback debacle, RDDT adjusted buyback policy to be more effective and that was observed in the price action when the stock fell sharply.
The catalysts were sector rotation and war, which meant some institutional money was going to leave RDDT regardless of company performance.
However in Q2, the price action had a clear floor and bounced back relatively quick when it fell below the floor at times. The buyback program likely had some influence there.
Then there was some reversal sector rotation, which acted as a catalyst leading to a price surge during the 2nd half of Q2 on no material news relating to company performance. This was a signal of seller exhaustion.
We recently witnessed a clear sentiment shift post earnings. Having said that, I believe there is unlikely to be a major sell offs. Under the hood, RDDT is doing the right thing. You don't see massive growth QoQ over 2 years if you don't execute well. The investment thesis is still strong. Importantly, money is on the table for those trading on short term catalysts or those holding for the long term.
My hypothesis is that the stock will climb back slowly because of the strong floor through buyback, even in the absence of a catalyst.
If there is indeed a positive catalyst, we might see a quick bounce back to 200 levels.
If you have opinions on upcoming price action, I'd like to hear your thoughts on what might happen and why it might happen?
EDIT: Typos.
We are going to beat revenue expectations massively. However, the tax drag is going to start showing up in a significant way. We've been spoilt.
Q2 Revneue: $795MM
Q2 EPS: $1.09
For context, Reddit is listed through a CDR on Canadian exchange TSX.
Canadian Depositary Receipts (CDRs) is essentially a fractional share with built-in currency hedging.
On most days, RDDT CDR matches the performance on RDDT.
It'll be interesting to see different preferences. Please share your reasons in the comments.