What Happened?
Shares of online community and discussion platform Reddit (NYSE: RDDT) jumped in the afternoon session after several analysts reiterated positive outlooks on the company, citing strong performance and growth potential. Truist Securities maintained its Buy rating on Reddit and increased its price target, pointing to strong user engagement and favorable guidance. Similarly, Jefferies kept its Buy rating, highlighting the company's solid financial performance. This analyst confidence followed as Reddit continued to expand its advertising products, having recently announced the launch of Interactive Ads. This new format was designed to transform traditional advertising into more participatory experiences for brands within the platform's numerous communities.
After the initial pop the shares cooled down to $187.94, up 1.2% from previous close.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 6.3% on the news that the broader U.S. stock market declined amid investor caution and a pullback in technology stocks.
The main story? Investors are cashing in on a good run and feeling a bit cautious. After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced. There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
Reddit is up 13.3% since the beginning of the year, but at $187.94 per share, it is still trading 30.6% below its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $3,726.
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