Reddit Stock Declines Amid Market Weakness
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 18 2024
0mins
Should l Buy RDDT?
Reddit Inc's stock fell 7.71% as it hit a 20-day low, reflecting broader market trends.
Despite the upcoming earnings call scheduled for February 5, where analysts expect a significant year-over-year EPS increase of 161%, the stock is currently trading 19.1% below its 20-day simple moving average. This bearish trend is compounded by the Nasdaq-100's decline of 1.16%, indicating sector rotation as investors shift away from tech stocks.
The implications of this decline suggest that while Reddit may have strong earnings potential, current market conditions are exerting downward pressure on its stock price, necessitating caution among investors.
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Analyst Views on RDDT
Wall Street analysts forecast RDDT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for RDDT is 260.00 USD with a low forecast of 207.00 USD and a high forecast of 325.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
22 Analyst Rating
14 Buy
8 Hold
0 Sell
Moderate Buy
Current: 151.050
Low
207.00
Averages
260.00
High
325.00
Current: 151.050
Low
207.00
Averages
260.00
High
325.00
About RDDT
Reddit, Inc. operates a social platform, Reddit. Reddit is a community of communities. It is built on shared interests, passion, and trust and is home to open and authentic conversations on the Internet. Reddit is a global, digital city where anyone in the world can join a community to learn from one another, engage in authentic conversations, explore passions, research new hobbies, exchange goods and services, create new communities and experiences, share a few laughs, and find belonging. Reddit has thousands of communities, endless conversations, and authentic human connections. Communities on Reddit are organized based on specific interests and are called subreddits. Reddit offers real-time access to evolving and dynamic topics, such as sports, movies, news, fashion, and the latest trends. On Reddit, users can submit, vote, and comment on the topics they care about. It has approximately 100,000+ active communities and approximately 101+ million daily active visitors.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Record Net Income: The net income for Q4 was $252 million, with diluted EPS at $1.24 and free cash flow of $264 million, reflecting the company's exceptional performance in profitability and cash flow management.
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- Record Net Income: The net income for Q4 was $252 million, with diluted EPS at $1.24 and free cash flow of $264 million, reflecting the company's exceptional performance in profitability and cash flow management.
- Strategic Buyback Investment: Reddit announced a $1 billion share repurchase program, demonstrating confidence in future growth while also committing to creating shareholder value, further solidifying its market position.
- Accelerated User Growth: Over 80 million users searched directly on Reddit each week, a 40% increase from last year, showcasing the platform's success in user engagement and community building.
See More
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- Gartner Earnings Miss: Gartner (NYSE:IT) fell 25.41% this week following the release of its fourth-quarter financial results and a downward revision of its FY26 guidance, with analysts' pessimistic outlook likely to exert further pressure on the stock.
- Reddit Stock Decline: Reddit (NYSE:RDDT) dropped 23.10% this week as multiple analysts lowered their price forecasts, reflecting market concerns over its profitability and potentially hindering its financing and expansion plans.
- Analyst Downgrades: Several analysts adjusted their price targets downward for these companies, indicating a widespread bearish sentiment regarding their future performance, which may lead investors to reassess their portfolios.
See More
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- Investor Status: Milwaukee Bucks forward Giannis Antetokounmpo announced his investment in New York-based prediction market platform Kalshi, becoming the first NBA player to directly invest in the company, marking a new trend of athlete engagement in fintech.
- Investment Terms: Under the NBA's collective bargaining agreement, players can hold up to 1% stakes in sports betting companies, and Antetokounmpo's investment complies with this rule while he will also engage in Kalshi's marketing and live events.
- Market Impact: His investment has sparked discussions on social media, particularly on platforms like Reddit, indicating that athletes' influence and participation in financial markets are on the rise, potentially attracting more athletes to the fintech sector.
- Collaboration Outlook: Kalshi's partnership with Antetokounmpo will focus on marketing and event promotion, and although he is restricted from trading in NBA-related markets, this collaboration is expected to enhance Kalshi's brand visibility and expand its user base.
See More
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- Tech Stock Rebound: The S&P 500 rose by 1.20% and the Dow Jones Industrial Average surged by 1.48%, reaching an all-time high, driven by better-than-expected tech earnings that boosted investor confidence in the sector's recovery.
- Bitcoin Recovery: Bitcoin rebounded over 7% from a 1.25-year low, lifting cryptocurrency-exposed stocks and alleviating concerns about liquidity in the crypto market, indicating renewed investor interest in digital assets.
- Amazon Investment Concerns: Amazon's announcement of a $200 billion investment in data centers, chips, and other equipment led to a more than 9% drop in its stock, raising doubts about the long-term returns of its AI investments and potentially impacting future investor confidence.
- Earnings Season Insights: With 79% of S&P 500 companies exceeding expectations and Q4 earnings projected to grow by 8.4%, this indicates strong corporate profitability, which may provide ongoing support for the market despite economic uncertainties.
See More
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- Strong Earnings Report: Reddit reported fourth-quarter revenue of $726 million, exceeding the market consensus of $665 million, indicating robust performance in its advertising business, which is expected to further drive stock recovery.
- Earnings Beat: The company achieved earnings per share of $1.24, significantly surpassing the analyst estimate of $0.94, demonstrating a notable improvement in profitability that may attract more investor interest.
- Stock Buyback Program: Reddit announced a $1 billion stock repurchase program with no set expiration date, aimed at enhancing shareholder value and boosting market confidence in the company's future prospects.
- Market Volatility Reaction: Despite an initial 9% surge in stock price on Friday morning, shares reversed course to decline nearly 5%, reflecting market caution towards high-volatility stocks, which could influence short-term investor decisions.
See More
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- Earnings Beat: Reddit reported an adjusted EPS of $1.24, significantly exceeding the analyst consensus of $0.94, indicating strong profitability that may attract more investor interest.
- Revenue Surge: The company achieved revenue of $726 million, a 70% year-over-year increase, with advertising revenue rising by 75%, demonstrating Reddit's growing competitiveness in the advertising market and potential for further market share expansion.
- Strong User Growth: Daily Active Uniques (DAUq) rose by 19% to 121.4 million, with international growth (up 28%) outpacing the U.S., showcasing Reddit's appeal and potential for expansion on a global scale.
- Concerns Over Slowing Growth: Despite strong earnings, growth in U.S. logged-in users slowed to 5%, raising market concerns about saturation in Reddit's most profitable market, while the CEO's announcement to stop reporting the split between logged-in and logged-out users may mask deceleration in high-value user growth.
See More
