TLDR
- Jim Cramer advised waiting for a pullback before buying Reddit (RDDT) stock, suggesting the $140-150 range
- Reddit shares dropped 11.11% on Friday to $133.98
- Chief Accounting Officer Michelle Reynolds sold $1.88 million worth of shares
- Despite a 71% revenue surge in Q4 2024, Reddit expanded its annual net losses by 433% to $484.27 million
- Piper Sandler analyst maintained an Overweight rating, raising the price target to $220 from $210
Reddit shares tumbled for the second straight day on Friday, March 7, dropping 11.11% to close at $133.98. The decline came after news broke that the company’s Chief Accounting Officer, Michelle Reynolds, had sold a significant portion of her holdings.
According to regulatory filings, Reynolds sold shares worth approximately $1.88 million at prices ranging from $151.35 to $164.31 per share. Following the transaction, Reynolds now holds 48,418 shares in the company.
The sell-off occurred against a backdrop of positive market performance. Major indices all finished higher on Friday, with the tech-heavy Nasdaq gaining 0.70%, the S&P 500 up 0.55%, and the Dow Jones rising 0.52%.
Reddit’s stock movement caught the attention of notable market commentator Jim Cramer. The Mad Money host recently expressed a cautious stance on Reddit shares despite viewing it as “a real company” with strong leadership.
“Steve Huffman, the CEO, does a fantastic job,” Cramer stated in January. However, he advised investors to wait for a pullback, specifically recommending the $140-150 range as a more attractive entry point.
The current price of $133.98 has now dipped below Cramer’s suggested buy range. This presents a potential opportunity for investors following his guidance, though market uncertainty remains a factor.
Reddit’s financial performance shows a company in transition. Despite strong revenue growth, the social media platform has struggled with profitability on an annual basis.
In 2024, Reddit saw its net losses expand by 433% to $484.27 million, up from $90.82 million in 2023. This occurred even as revenues grew by 62% to $1.3 billion from $804 million the previous year.
The fourth quarter of 2024 did provide some positive signals. Reddit recorded a 283.7% jump in quarterly net income, reaching $71 million compared to $18.5 million in the same period a year earlier.
Revenue for the fourth quarter jumped by 71%
Revenue for the fourth quarter surged by 71%, totaling $427.7 million versus $249.8 million in Q4 2023. These results indicate potential momentum in Reddit’s business model despite the broader annual losses.
Wall Street analysts remain largely optimistic about Reddit’s prospects. On February 21, Piper Sandler analyst Thomas Champion increased his price target on RDDT stock to $220 from $210, maintaining an Overweight rating.
Champion noted that while Reddit experienced a decline in audience engagement in early December, January 2025 showed signs of recovery. The analyst believes that user trends are now returning to a positive trajectory.
Hedge fund interest in Reddit remains substantial. According to recent data, 87 hedge funds hold positions in the company, reflecting institutional confidence in its long-term potential.
The broader market context may also be influencing Reddit’s stock performance. Cramer has recently commented on current market conditions, describing what he calls a “Walmart White House” scenario with consistently lower prices across major indices.
Cramer attributes much of the current market uncertainty to confusion around trade and immigration policies. He suggested that European markets have performed better recently because their central banks have been lowering interest rates to stimulate demand.
Buying opportunity or a warning sign
For investors considering Reddit stock, the recent price drop may represent either a buying opportunity or a warning sign. The contrast between strong quarterly results and expanding annual losses highlights the company’s current growth-versus-profitability dynamic.
With Reddit’s stock now trading below the range suggested by Cramer earlier this year, market participants will be watching closely for any further insights from company leadership or additional insider transactions that might signal confidence levels within the organization.
The tech platform continues to grow its user base and revenue, but questions about its path to sustainable profitability remain central to its investment case. The coming quarters may prove crucial as Reddit works to convert its popularity into consistent financial performance.
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