TLDR
- Reddit (RDDT) fell nearly 10% on Thursday, hitting a low of $128.11.
- CTO Christopher Slough sold 9,500 shares worth approximately $1.34 million on March 23
- COO Jennifer Wong sold more than 39,000 shares worth approximately $6.6 million across multiple transactions
- Analysts cited weak reactions to ad sales and slowing user growth concerns
- RDDT is now down roughly 40% year to date, trading well below its 50 and 200 day moving averages.
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Reddit stock fell sharply on Thursday, as news of heavy insider selling from two top executives added to a difficult year for the social media platform.
The stock fell as much as 10.86%, hitting a low of $128.11. Trading volume was about 2.4 million shares, about 56% less than the average daily trading volume of 5.5 million shares.
Christopher Slough, chief technology officer, sold 9,500 shares on March 23 at an average price of $141.28, netting about $1.34 million. The sale reduced his ownership stake by approximately 20%, leaving him with 38,413 shares.
Director of Operations Jennifer Wong was more active. It sold 5,658 shares on March 18 at $143.42, then sold an additional 33,507 shares on the same day at $143.41. Combined, the two deals totaled approximately $5.6 million. After the sale, Wong has approximately 1.09 million shares worth more than $156 million.
Both sales were disclosed through standard SEC filings.
Build pressure analyzer
Insider selling isn’t the only weight on the stock. Analysts have indicated weak reactions from… Reddit ad sales efforts, and there are growing questions about slowing user engagement and traffic growth.
Cantor Fitzgerald lowered its price target from $240 to $170, and assigned a “neutral” rating. Goldman Sachs also cut its target from $236 to $206, while also maintaining a “neutral” rating.
Not everyone turns bearish. Needham maintained a “Buy” rating with a price target of $300, and the consensus rating for the stock among analysts remains “Moderate Buy” with an average target of $242.19.
This target is a long way from where RDDT is currently trading.
The stock’s 50-day moving average is at $159.88 and its 200-day moving average is at $200.15. RDDT is trading under both, and is down nearly 40% year to date.
Reddit It has a recent earnings beat to point to. In its most recent quarterly report on February 5th, the company reported EPS of $1.24 versus the consensus estimate of $0.96. Revenue was $725.61 million, up 69.7% year over year and ahead of the estimate of $665.80 million.
In numbers
The company has a market cap of about $24.6 billion, a price-to-earnings ratio of 49.14, and a beta of 2.40 – meaning it tends to move more sharply than the broader market.
Sell-side analysts collectively expect Reddit to post EPS of $1.12 for the current fiscal year.
The technical picture is still unfavorable. The stock currently has a “Strong Sell” signal based on technical indicators.
The stock last closed at $139.63 before Thursday’s session.
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