Reddit Stock’s Wild Swings

By Douglas A. McIntyre Updated Apr 1, 5:28AM EDT · Published Mar 29, 6:45AM EDT

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Reddit Stock’s Wild Swings — © Povozniuk / iStock via Getty Images

The Reddit Inc. (NYSE: RDDT | RDDT Price Prediction) initial public offering was five trading days ago. After going out at $34 a share, it skyrocketed to $57.80, then closed at $50.44. On the fifth day, it dropped to $49.30. Some investors who bought on the first day may have been burned.

Among the reasons the stock dropped is probably that CEO Steve Hoffman sold 500,000 shares, Chief Operating Officer Jennifer Wong sold 514,000 shares, and short sellers hit the stock hard.

Ben Silverman, vice president of research at Verity, told CNBC, “If the prospects are so bright, why are insiders selling?” Trading firm Hedgeye Risk Management said on Reddit’s first day of trading that it expected the stock to move 50% lower. (These 25 famous companies really angered customers.)

One challenge for Reddit investors is that it will release earnings for the first time in late May. In the meantime, it is hard to say how to value the company. It is often compared to Instagram, X, TikTok, and Facebook.

The value of major social media companies can move in opposite directions. Many investors have marked down the value of X, which is privately held. Shares of Facebook’s parent Meta, on the other hand, are up 37% so far this year, while the S&P 500 is 10% higher.

Almost two months is a long time for investors to wait until they see earnings. In the meantime, they can only speculate. That, as much as anything else, will cause continued volatility.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.