Reddit (RDDT) Stock Plunges 19% Post-Earnings, CEO Sells Shares
Reddit (RDDT) has experienced a significant sell-off, losing approximately 19% since its quarterly earnings report. The decline follows a six-month rally that saw shares quadruple in value.
The social media company's fourth-quarter earnings beat analyst estimates, but daily active users declined due to a Google algorithm update that impacted traffic. CEO Steve Huffman indicated during an earnings call that traffic from Google Search has since recovered in the first quarter.
Despite this, RDDT shares fell 5% the following trading day and have continued to decline over the past week. The recent 19% loss marks the stock's largest five-day decline since April 2024.
SEC filings reveal that Huffman and his trust sold $70.5 million worth of Reddit shares on Tuesday, marking the largest sale by the CEO to date.
Additionally, Reddit shares fell 7.5% on Thursday amid an FTC inquiry into tech platforms' policies regarding user bans for specific content.
Despite recent declines, RDDT stock remains up nearly 220% compared to six months ago, driven by strong advertising revenue and partnerships with AI companies.
Wall Street analysts generally maintain bullish ratings on RDDT, with some noting high buy-side expectations prior to the latest earnings report.