News

What Happened?

Shares of online community and discussion platform Reddit (NYSE:RDDT) fell 11.9% in the afternoon session after markets seemed to have caught "tariff/trade war fever" once again (Nasdaq down 1.9%, S&P 500 down 1.2%) amid broader geopolitical anxiety. The volatility was perhaps also related to uncertainty surrounding the Fed's rate decision to be announced later in the week. The consensus estimate was for the Fed to keep interest rates at the range of 4.25%-4.5%.

This could be a bit of a letdown for the dovish camp, expecting some policy relief to help offset the growing market weakness amid the ongoing trade war, which some analysts considered to be bad for growth and corporate earnings.

Separately, Redburn analysts initiated coverage on the stock with a Sell rating and a $75 price target. The target price implied a potential 30% downside from where shares traded before the bearish rating was revealed.

The shares closed the day at $110.09, down 12.3% from previous close.

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What The Market Is Telling Us

Reddit’s shares are extremely volatile and have had 66 moves greater than 5% over the last year. But moves this big are rare even for Reddit and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 12.3% on the news that Loop Capital analysts provided bullish projections following the stock's recent declines. The analysts said Reddit had "the biggest upside potential relative to Street estimates in our coverage universe." As a result, the analysts reiterated a Buy rating and raised their price target from $180 to $210. The new price target implied a potential 78% upside from where shares traded before the revised rating.

Reddit is down 33.6% since the beginning of the year, and at $110.10 per share, it is trading 51.1% below its 52-week high of $225.23 from February 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 $2,183.

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