Reddit shares plunge 25% in two days, end week below first day close

Technology

The trading floor of the New York Stock Exchange prepares for the social media platform Reddit’s initial public offering in New York City on March 21, 2024.

Spencer Platt | Getty Images

Reddit shares are plummeting after experiencing a rally stemming from the social media company’s IPO last week.

Shares closed at $49.32, ending the week below their closing price on Reddit’s first day of trading on the New York Stock Exchange. They closed at $50.44 last Thursday. Stock markets are closed on Good Friday.

Reddit shares began their downward spiral on Wednesday, when they sank about 11% to $57.75 at market close. That day, Hedgeye Risk Management described Reddit’s stock as “grossly overvalued” in a report cited by Bloomberg News, adding the company was on the firm’s “short bench.”

Earlier this week, Reddit disclosed in a corporate filing that CEO Steve Huffman sold 500,000 shares. Ben Silverman, vice president of research at Verity, told CNBC the move was expected and represents just “a portion of his holdings.”

Meanwhile, Reddit Chief Operating Officer Jennifer Wong disclosed that she sold 514,000 shares and now holds 1.4 million of the company’s shares.

“There’s always a bit of a disconnect, because the purpose of bringing the company public is twofold,” Silverman said. “It’s not just to generate liquidity for the company itself so that it can expand and grow. In these situations, it often allows insiders to cash out to generate liquidity, and that’s something executives have to consider here.”

“If the prospects are so bright, why are insiders selling?” Silverman added.

Reddit shares started off the week on a high note and soared 30% on Monday. The company’s shares then rose 8.8% on Tuesday to close at $65.11, even after New Street Research issued a neutral rating on the company.

The New Street Research analysts wrote in a note that they wouldn’t alter their $54 price target and that they expect “volatility into the first earnings report.”

Don’t miss these stories from CNBC PRO:

Reddit shares slump after CEO Steve Huffman sells 500,000 shares

Read original article here.

Products You May Like

Articles You May Like

Tesla is laying off 285 employees in Buffalo, New York as part of a broad restructuring
Pick Your Favorite ’90s Movies and Get a Book Rec
No Doubt, Sublime, Blur & Tyler, the Creator
Doja Cat, J Balvin, Khruangbin, The Rose & More
More than 40 people still stranded the day after a deadly cable car accident in Turkey