RDDT delivered a 12.6% single-day surge on Friday, leaving shorts who rebuilt positions after the July earnings rout sitting on immediate paper losses — the week's defining tension is how that short base holds up from here.
The positioning picture is contradictory in an interesting way. Short interest remains elevated at nearly 14% of the free float, roughly 19.1 million shares, and it crept higher again through the week even as the stock rallied 10%. That tells you bears were not capitulating. Yet the lending market offers them no distress signal: borrow availability has actually loosened further to 619% — meaning nearly six shares sit available for every one currently borrowed — and cost to borrow has dropped to just 0.34%, down a third from a week ago. Shorts added into weakness and the conditions to maintain or expand those positions remain cheap. Options traders eased off the defensive stance slightly on Friday, with the put/call ratio dipping to 0.87 from 0.90 earlier in the week, though it is still above its 20-day average of 0.86 and closer to the 52-week high of 0.94 than the low of 0.73. The overall picture is a high short base with easy borrow — not a squeeze setup, but a stock that could hurt bears quickly if momentum continues.
The Street's reaction to the July 30 earnings print was largely to trim targets while holding ratings, a classic "good company, reset valuation" response. JP Morgan's Doug Anmuth cut his target from $200 to $185, keeping a Neutral. Oppenheimer, Piper Sandler, Wedbush, Wells Fargo, and Cantor Fitzgerald all lowered targets as well, with Wells Fargo's cut the most severe — from $187 to $142. The two outliers moved the other way: B. Riley raised to $270 and Truist lifted to $275. The mean target across the Street now sits at $215, implying roughly 21% upside from Friday's close of $178. Bulls point to AI training data licensing as a high-margin revenue stream that changes the earnings profile. Bears counter that the company remains dangerously dependent on Google search traffic for user growth, and that advertising revenue is exposed to algorithm changes and competition. The EPS momentum factor score is a standout at 86th percentile over both 30- and 90-day windows, but the forward earnings growth rank sits at just the 26th percentile — a sign that near-term beats have been strong but the longer runway is murkier.
The July 30 earnings print itself remains the dominant recent data point. The stock fell 21% the following day and shed a further 15% over the subsequent five days — one of the sharpest post-earnings selloffs in the stock's history. The bounce this week has recovered roughly half that single-day loss. CEO Steve Huffman sold roughly $2.9 million in shares across multiple tranches on August 4, in the trough of the post-earnings decline, which is notable context but carries a trade significance score of just 2 out of 10, suggesting the transactions were likely scheduled rather than discretionary. BlackRock added 342,000 shares through July 31, and AllianceBernstein built a new position of nearly 1.8 million shares through May — both pointing to institutional buying interest even as the stock was weakening.
With the next earnings event not due until October 30, the August-September window is driven by whether RDDT can hold the week's gains and whether the short base — still large and cheaply maintained — begins to cover or doubles down.
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