In This Article:
What Happened?
Shares of online community and discussion platform Reddit (NYSE:RDDT) fell 5.1% in the afternoon session after Wells Fargo downgraded the stock from Buy to Hold, raising concerns as Google prepares to fully integrate generative AI into its platform. The firm noted that recent disruptions in search-driven traffic appear more permanent, as more users turn to AI-powered search.
The shares closed the day at $107.97, down 4.7% from previous close.
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What The Market Is Telling Us
Reddit’s shares are extremely volatile and have had 62 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 27 days ago when the stock gained 8.2% on the news that investor sentiment improved on renewed optimism that the US-China trade conflict might be nearing a resolution. According to reports, Treasury Secretary Scott Bessent reinforced this positive outlook by describing the trade war as "unsustainable," and emphasized that a potential agreement between the two economic powers "was possible." His comments signaled to markets that both sides might be motivated to seek common ground, raising expectations for reduced tariffs and more stability across markets.
Reddit is down 35% since the beginning of the year, and at $107.90 per share, it is trading 52.1% 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 $2,139.
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