TLDR
- Reddit stock fell 4.6% to $245.83 with trading volume down 84% from average
- CFO Andrew Vollero sold 30,000 shares worth $6.5 million at average price of $218.09
- Stock has declined over 16% from recent $283 highs despite record Q2 earnings
- Analysts raised price targets with Needham boosting forecast from $215 to $300
- Company posted $89 million profit and 78% revenue growth in latest quarter
Reddit shares dropped 4.6% during Tuesday trading as the social media platform continues retreating from post-earnings highs. The stock closed at $245.83 with unusually light volume of 1.2 million shares, representing an 84% decline from the daily average of 7.6 million shares.
The pullback extends a selling streak that has pushed Reddit down more than 16% from its recent peak of $283. That high came after the company delivered blockbuster second-quarter results that exceeded Wall Street expectations across key metrics.
Analyst Price Target Updates Drive Mixed Signals
Wall Street analysts remain split on Reddit’s direction following the earnings-driven rally. Needham & Company raised their price target from $215 to $300 while maintaining a buy rating on the shares. The firm’s bullish stance reflects confidence in Reddit’s monetization progress and user growth trajectory.
Cannonball Research reiterated a buy rating in Tuesday’s session. Citigroup kept an outperform rating on the stock following last week’s results. However, Goldman Sachs maintained a more cautious neutral stance with a $212 price target.
The mixed analyst sentiment reflects broader uncertainty about Reddit’s valuation after its rapid gains. The stock carries a consensus price target of $197.88 with a “Moderate Buy” rating from Wall Street researchers.
Executive Selling Activity Raises Questions
Company insiders have been active sellers during the recent price strength. CFO Andrew Vollero sold 30,000 shares at an average price of $218.09, generating proceeds of $6.5 million. The transaction reduced his stake by 9.55% to 284,168 shares.
CEO Steve Huffman also trimmed his position, selling 18,000 shares at $223.41 per share for over $4 million. The sale represented a 3.51% reduction in his holdings. Combined with other insider activity, executives have sold 344,126 shares worth $71.3 million over the past 90 days.
The timing of these sales coincided with Reddit’s run to new highs following earnings. Since going public at $34 per share in March 2024, the stock has delivered gains exceeding 600%.
Reddit’s second-quarter performance drove the initial rally that pushed shares to $283. Revenue jumped 78% year-over-year to $500 million, driven by 84% growth in advertising revenue. The company achieved its first quarterly profit of $89 million while gross margins reached 90.8%.
Daily active users grew 21% to 110.4 million with international expansion driving much of the growth. Reddit provided third-quarter guidance projecting revenue between $535 million and $545 million. The stock trades with a market cap of $44.45 billion and maintains a beta of 2.38, reflecting continued volatility since its IPO debut.
