Reddit, Inc. (NYSE: RDDT) experienced a downturn today, with its stock price dropping 2.13% to $122.33 as of 1:06 PM EDT. The decline follows a trading session marked by a volume of 3,251,551 shares, with the stock opening at $124.00 and fluctuating between a daily low of $120.02 and a high of $127.27. This movement comes after the stock closed at $124.94 the previous day, reflecting ongoing volatility in the social media company’s market performance.
The dip in Reddit’s stock price aligns with broader market uncertainty and specific concerns about the company’s growth trajectory. Over the past week, RDDT has faced scrutiny from analysts, contributing to a rollercoaster ride for investors. Just days ago, on March 22, the stock surged following a bullish reaffirmation from Needham analysts, who maintained a "Buy" rating with a $220 price target. This optimism was driven by Reddit’s reported revenue growth and its expanding advertising capabilities, bolstered by a partnership with Google (NASDAQ: GOOGL). Changes to Google’s search algorithm have been credited with nearly doubling Reddit’s user base over the past 18 months, a factor that has fueled both its stock performance and its visibility online.
However, the positive sentiment was tempered earlier this month when Redburn Atlantic initiated coverage with a "Sell" rating and a $75 price target on March 17. Analysts at Redburn argued that Reddit’s reliance on Google Search represents a "temporary tailwind" rather than a sustainable growth driver, raising doubts about the company’s ability to maintain its momentum. This bearish outlook contributed to a sharp 12% drop in the stock price on March 18, highlighting the stock’s sensitivity to analyst sentiment and broader market trends.
Today’s decline follows a relatively muted trading environment, with the S&P 500 showing signs of stabilization after a turbulent start to 2025. Reddit’s stock, which went public in March 2024 amid a bull market, has been a volatile performer. Year-to-date, RDDT is down approximately 33.6%, trading well below its 52-week high of $230.41 reached in February. Despite this, the stock remains significantly above its 52-week low of $37.35, reflecting the dramatic swings that have characterized its first year as a publicly traded company.
Investors appear divided on Reddit’s prospects. The company’s recent financials have shown promise—last October, it reported a 68% revenue increase and achieved GAAP profitability for the first time, a milestone that sent shares soaring 20% in after-hours trading. Yet, challenges remain, including significant stock-based compensation expenses and a dependence on external factors like Google’s algorithm changes, which have introduced volatility in user growth metrics.
Wall Street’s consensus on RDDT remains cautiously optimistic, with a "Moderate Buy" rating based on 12 "Buy," six "Hold," and one "Sell" recommendations over the past three months. The average price target of $207.06 suggests a potential upside of nearly 69% from current levels, though today’s performance underscores the stock’s susceptibility to short-term pressures.
As Reddit navigates its post-IPO journey, today’s slide serves as a reminder of the challenges facing the social media platform in a competitive digital landscape. With a market capitalization hovering around $19 billion, Reddit continues to captivate investors, but its path forward will likely depend on its ability to diversify revenue streams and reduce its reliance on external partners like Google. For now, the stock remains a high-stakes bet in an unpredictable market.
