Reddit (RDDT) Stock Plummets 19% After Earnings, CEO Sells Shares
Reddit (RDDT) stock has lost approximately 19% since its earnings report last week, wiping out gains made during a six-month rally that saw shares quadruple.
Despite surpassing earnings per share estimates, Reddit's daily active users declined due to a change in Google's search algorithm. The platform's CEO, Steve Huffman, stated that traffic from Google Search has since recovered.
However, shares have continued to fall, with the stock's 19% drop being the largest five-day decline since April 2024. Huffman and his trust sold $70.5 million worth of Reddit shares on Tuesday, the largest sale by the CEO to date.
Additionally, Reddit's policies, which can ban users for harassment or sexually explicit content, have come under scrutiny by the US Federal Trade Commission. This inquiry has contributed to the stock's decline.
Despite the recent losses, Reddit stock remains up almost 220% over the past six months. Wall Street analysts continue to rate the stock as a "Buy," citing strong advertising revenue and partnerships with AI companies.