- Social media platform Reddit (RDDT) has seen a significant increase in its stock price following its IPO in March 2021.
- Despite hitting new lows in April, Reddit’s quarterly results came in above expectations, leading to a surge in premarket trading.
- However, with top executives and board members recently selling off shares, potential investors are advised to wait for the stock to form a new base before purchasing.
Reddit’s stock has seen a rollercoaster ride since its IPO in March 2021. Despite some lows, the company’s better-than-expected quarterly results have boosted its stock. However, with recent insider selling, is it the right time to buy Reddit stock?
Reddit’s IPO and Initial Performance
Reddit made its debut on the New York Stock Exchange in March 2021, with shares soaring as much as 70% beyond the $34 offering price. The opening price gave Reddit a market value of about $6.4 billion. The IPO raised $748 million. However, on April 18, Reddit stock hit new lows amid volatile trading, with shares trading as low as 37.35 before rebounding.
Reddit’s First Quarterly Results
Reddit reported its first quarterly results recently. Revenue came in above expectations at $243 million, while the company’s loss was not as bad as analysts feared, at $8.19 per share. Analysts were expecting Reddit to post a loss of $8.75 per share from sales of $214 million, according to FactSet. Following the announcement, Reddit stock soared nearly 12% in premarket trading.
Insider Selling of Reddit Stock
In recent weeks, Reddit CEO Steve Huffman and other top executives and board members disclosed share sales, just a week after the social network had its initial public offering. Huffman sold 500,000 shares, receiving $16.15 million. CFO Vollero Andrew, COO Jennifer Wong, CTO Christopher Slowe, and CAO Michelle Reynolds also sold off shares, totaling $41.245 million worth of Reddit shares.
Is Reddit Stock a Buy Right Now?
Despite its recent rebound, the stock remains more than 30% off its post-IPO highs. Reddit stock is not a buy right now. Potential investors should wait for the stock to form a new base before purchasing shares.
Conclusion
Reddit’s stock has seen significant volatility since its IPO. Despite better-than-expected quarterly results, the recent insider selling of shares suggests potential investors should exercise caution. It may be wise to wait for the stock to form a new base before considering a purchase.
