Reddit (NYSE:RDDT) Shares Gap Down Following Analyst Downgrade

Reddit Inc. (NYSE:RDDT) gapped down before the market opened on Friday after Wedbush lowered their price target on the stock from $250.00 to $221.00. The stock had previously closed at $178.04, but opened at $147.70. Wedbush currently has an outperform rating on the stock. Reddit shares last traded at $139.6010, with a volume of 5,172,033 shares.

RDDT has been the topic of a number of other research reports. Truist Financial set a $265.00 price target on shares of Reddit in a research report on Friday, May 1st. Oppenheimer reissued an “outperform” rating and issued a $225.00 price objective on shares of Reddit in a research report on Friday, May 1st. Bank of America dropped their price objective on Reddit from $205.00 to $175.00 and set a “neutral” rating on the stock in a research note on Thursday, April 2nd. Wells Fargo & Company set a $142.00 target price on Reddit in a report on Friday. Finally, Evercore reissued an “outperform” rating and issued a $265.00 price target on shares of Reddit in a research note on Friday. Two research analysts have rated the stock with a Strong Buy rating, twenty have issued a Buy rating and eleven have issued a Hold rating to the stock. According to MarketBeat, Reddit has an average rating of “Moderate Buy” and a consensus target price of $228.00.

Insider Buying and Selling at Reddit

In other news, COO Jennifer L. Wong sold 39,167 shares of the stock in a transaction that occurred on Monday, May 18th. The stock was sold at an average price of $158.52, for a total value of $6,208,752.84. Following the completion of the sale, the chief operating officer directly owned 1,088,451 shares of the company’s stock, valued at $172,541,252.52. This represents a 3.47% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Steve Ladd Huffman sold 18,000 shares of the stock in a transaction that occurred on Monday, June 15th. The stock was sold at an average price of $178.26, for a total value of $3,208,680.00. Following the completion of the sale, the chief executive officer directly owned 373,814 shares of the company’s stock, valued at approximately $66,636,083.64. This trade represents a 4.59% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last quarter, insiders sold 169,141 shares of company stock worth $28,680,845. Insiders own 28.48% of the company’s stock.

Key Reddit News

Here are the key news stories impacting Reddit this week:

• Positive Sentiment: Q2 results beat expectations. Reddit reported adjusted EPS of $1.25, versus the $0.95–$0.99 analyst consensus, while revenue rose 61% year over year to $804.9 million, well above the roughly $731 million estimate. Net income reached $253 million, supported by continued user growth and higher advertising revenue. Reddit crushes revenue and earnings estimates, issues strong guidance
• Positive Sentiment: Third-quarter guidance exceeded Wall Street forecasts. Reddit projected revenue of $860 million to $870 million, above the $829.7 million consensus estimate. Management also said AI-powered advertising tools are helping attract marketers and support commercial momentum. Reddit expects revenue above estimates as AI tools attract advertisers
• Positive Sentiment: Analyst sentiment improved. KeyCorp upgraded Reddit to “strong buy,” reflecting confidence in the company’s growth and momentum. Reddit upgraded by KeyCorp
• Neutral Sentiment: Management defended Reddit’s search value. CEO Steve Huffman said Google’s AI Overviews have not yet replaced the value of traditional search links, but the company acknowledged that search-engine referrals have become “choppy.”
• Negative Sentiment: AI-related search disruption overshadowed the earnings beat. Investors are concerned that Google’s AI search features could reduce traffic referrals to Reddit and potentially weaken user growth, engagement, and advertising monetization. Reports also suggested Reddit could reconsider a Google partnership reportedly worth about $60 million annually if search traffic continues to deteriorate. Reddit’s strong quarter fails to lift shares as AI search concerns linger

Institutional Investors Weigh In On Reddit

Several institutional investors have recently bought and sold shares of RDDT. LOM Asset Management Ltd purchased a new stake in Reddit in the 4th quarter valued at $33,000. Sunbelt Securities Inc. boosted its holdings in Reddit by 87.5% during the 1st quarter. Sunbelt Securities Inc. now owns 195 shares of the company’s stock worth $26,000 after acquiring an additional 91 shares during the last quarter. EverSource Wealth Advisors LLC boosted its holdings in Reddit by 48.1% during the 2nd quarter. EverSource Wealth Advisors LLC now owns 197 shares of the company’s stock worth $34,000 after acquiring an additional 64 shares during the last quarter. Beacon Investment Advisory Services Inc. bought a new stake in shares of Reddit in the 2nd quarter worth $35,000. Finally, Summit Securities Group LLC bought a new stake in shares of Reddit in the 4th quarter worth $46,000.

Reddit Price Performance

The company’s fifty day moving average price is $176.74 and its 200 day moving average price is $165.09. The company has a market cap of $26.43 billion, a PE ratio of 39.41 and a beta of 1.93.

Reddit (NYSE:RDDT) last released its quarterly earnings results on Thursday, July 30th. The company reported $1.25 earnings per share for the quarter, beating analysts’ consensus estimates of $0.95 by $0.30. Reddit had a net margin of 28.60% and a return on equity of 25.48%. The company had revenue of $804.91 million for the quarter, compared to analyst estimates of $731.00 million. During the same period last year, the firm earned $0.45 earnings per share. The firm’s revenue was up 61.0% on a year-over-year basis. On average, analysts forecast that Reddit Inc. will post 4.85 EPS for the current year.

About Reddit

Reddit is an online social news aggregation, discussion and content-sharing platform organized around user-created communities called “subreddits,” each focused on a particular topic or interest. Registered users submit links, text posts, images and video, and community members vote and comment to surface popular content. The site is accessed via its web platform and mobile apps for iOS and Android, and it supports live events such as Ask Me Anything (AMA) sessions and community-driven discussions.

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit is headquartered in San Francisco and serves a global audience with particularly large user bases in the United States and other English-speaking markets.