When Can I Buy Reddit Stock? Key Insights on the Latest Surge and Buy Points
Reddit stock soared 16% after partnering with OpenAI. Wondering when you can buy Reddit stock? It’s currently forming an IPO base with a buy point at 74.90. Investors might consider an early entry at 64.50. Keep an eye on its performance and stay within the 5% buy range.
When Can I Buy Reddit Stock? Reddit Stock Soars On OpenAI Partnership
Reddit (RDDT) saw a significant rise of over 16% after revealing its new partnership with Microsoft-backed OpenAI. So, when can you buy Reddit stock in today’s market?
Reddit will grant OpenAI access to its Data API, allowing the AI company to learn from Reddit’s content in real-time. This partnership will introduce AI-powered features to Reddit and establish a new advertising collaboration between the two companies.
Deutsche Bank analysts noted that the OpenAI partnership indicates strong demand for Reddit’s data, prompting them to raise their price target for Reddit stock from 62 to 65, maintaining a buy rating.
Currently, Reddit stock is forming an IPO base with a buy point at 74.90. Investors might consider using Tuesday’s high of 64.50 as an early entry point. After briefly rising more than 16% on Friday, the stock settled around 62.60, still below the buy point.
Reddit recently reported its first quarterly results, surpassing revenue expectations and showing a smaller loss than analysts had predicted. The company posted a loss of $8.19 per share on sales of $243 million, better than the expected loss of $8.75 per share on $214 million in sales.
When Reddit debuted on the New York Stock Exchange, shares surged up to 70% above the $34 offering price, closing at 50.31—a 48% increase. This IPO valued Reddit at approximately $6.4 billion and raised $748 million.
Reddit Stock Fundamental Analysis
Founded in 2005, Reddit operates one of the largest online message-board platforms, featuring 1 billion posts across 100,000 active communities. In the previous year, Reddit generated $804 million in sales, a 21% increase from 2022. However, the company incurred a loss of about $91 million in 2023 and has yet to achieve profitability. Reddit’s IPO filing acknowledged delays in monetizing its platform.
“We turned a profit in the latter half of 2023 and grew revenue three times faster than costs last year,” said Reddit CEO Steve Huffman. “There is a special business beyond Reddit’s community and platform.”
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Reddit Stock Technical Analysis
Due to its short and volatile trading history, Reddit stock holds a 63 out of 99 IBD Composite Rating, reflecting its fundamental and technical metrics. The stock is working on an IPO base with a 74.90 buy point, but investors might use Tuesday’s high of 64.50 as an early entry. The 5% buy area from this trigger extends up to 67.73.
| Aspect | Details |
|---|---|
| Ticker Symbol | RDDT |
| Current Price | $62.60 (as of the latest update) |
| Recent High | $64.50 (Tuesday’s high) |
| IPO Base Buy Point | $74.90 |
| 5% Buy Area | Up to $67.73 |
| Price Target (Deutsche Bank) | $65 |
| Recent Stock Surge | Over 16% increase |
| Recent IPO Performance | Closed at $50.31, up 48% from $34 offering price |
| Latest Quarterly Results | Loss of $8.19 per share on $243 million sales |
| Expected Loss | $8.75 per share on $214 million sales (FactSet) |
| Annual Sales (2023) | $804 million (up 21% from 2022) |
| Annual Loss (2023) | $91 million |
| Deutsche Bank Rating | Buy |
| Insider Sales Total | $41.245 million |
Insiders Sell Reddit Stock
Recently, Reddit’s top executives, including CEO Steve Huffman, have sold shares shortly after the IPO. Huffman sold 500,000 shares at $32.30 each, totaling $16.15 million. Other executives and board members also sold substantial amounts of stock, totaling $41.245 million.
Is Reddit Stock a Buy Right Now?
With Friday’s strong performance, Reddit stock is currently in the buy range past an aggressive entry. It’s a potential buy right now as long as it stays within the 5% buy area and doesn’t fall below the buy trigger. However, some investors might wait for the stock to reach the official buy point before purchasing.
Buy Reddit Stock?
You can buy Reddit stock (ticker symbol RDDT) on the New York Stock Exchange starting March 21, 2024. However, Reddit’s top 75,000 users were given priority to buy shares at the IPO price of $34 before public trading began.
On its first day of trading, Reddit stock opened at $47, a 38.2% surge from the IPO price, and reached a peak of $57.80 during the day, marking a 70% premium. The IPO raised $748 million for Reddit, valuing the company at $6.5 billion.
While Reddit stock has seen volatile trading since its debut, falling over 40% from its highs, it remains more than 30% above its $34 IPO price. Analysts advise waiting for Reddit to form a proper base before buying, as IPO bases can be short and erratic. The stock is not considered a buy right now, but a new base could offer a buying opportunity in the coming weeks.
What are the risks of investing in Reddit stock
1. Volatility and Overvaluation
Reddit has been labeled as “an institutional meme stock,” which can lead to significant price volatility. Following its IPO, the stock experienced a rapid rise but has since lost substantial gains. Analysts have indicated that there is a potential downside risk of around 15% from its current levels, suggesting that the stock may be overvalued.
2. Unpredictable User Growth
Reddit’s user growth is inconsistent. Although it reported a 27% increase in daily active unique users in 2023, only half of these users were logged in, which hampers monetization efforts. The company has warned that user growth could fluctuate due to various external factors, making long-term growth projections uncertain.
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3. Monetization Challenges
Despite a growing user base, Reddit struggles to effectively monetize its audience. The average revenue per user (ARPU) in the U.S. remains low, and the company faces challenges in converting casual visitors into paying users, which is crucial for its ad revenue.
4. Dependence on Unpaid Moderators
Reddit relies heavily on unpaid moderators to manage content and enforce community guidelines. This model poses risks, as the retention of these moderators is critical for maintaining the platform’s integrity. If Reddit fails to keep its moderators satisfied, it could face operational challenges.
5. Competition from AI and Other Platforms
Reddit is increasingly competing with generative AI platforms and other social media networks for user attention. As users may turn to AI for information retrieval, this could detract from Reddit’s traffic and engagement, particularly among logged-out users who are less likely to return to the platform. These factors indicate that while Reddit may have a passionate user base, its business model and growth trajectory face significant uncertainties, making it a risky investment option.
Frequently Asked Questions
1. What caused Reddit stock to rise recently?
Reddit stock surged over 16% after announcing a partnership with Microsoft-backed OpenAI. This collaboration will allow OpenAI access to Reddit’s Data API and introduce AI-powered features to Reddit’s platform.
2. When can I buy Reddit stock?
Reddit stock is currently forming an IPO base with a buy point at 74.90. Investors might consider using Tuesday’s high of 64.50 as an early entry point. As of now, the stock is in an aggressive buy range.
3. What were Reddit’s recent financial results?
Reddit reported a loss of $8.19 per share on $243 million in sales. This result was better than the expected loss of $8.75 per share on $214 million in sales.
4. How did Reddit’s IPO perform?
Reddit’s IPO saw shares rise up to 70% above the $34 offering price, closing at 50.31—a 48% increase. The IPO raised $748 million and valued Reddit at approximately $6.4 billion.
5. What is Reddit’s current market position?
Reddit operates one of the largest online message-board platforms with 1 billion posts across 100,000 communities. Despite an increase in sales to $804 million last year, the company reported a $91 million loss in 2023 and is still working toward profitability.
6. How does Reddit stock rate technically?
Reddit stock has a 63 out of 99 IBD Composite Rating, reflecting its fundamental and technical metrics. It is working on an IPO base with a buy point at 74.90, and the 5% buy area extends up to 67.73.
7. Have insiders sold Reddit stock recently?
Yes, Reddit executives and board members have sold substantial amounts of stock shortly after the IPO. For instance, CEO Steve Huffman sold 500,000 shares for $16.15 million.
8. Is Reddit stock a good buy right now?
Reddit stock is currently in a buy range, but investors should be cautious. It is advisable to monitor the stock to ensure it remains within the 5% buy area or consider waiting for it to hit the official buy point before purchasing.
9. Where can I find more information on Reddit stock and similar investment opportunities?
For more details on leading stocks and those nearing buy points, check out IBD Stock Lists like the Stocks Near Buy Zones. To understand the current stock market trend, refer to IBD’s daily analysis, The Big Picture.
