What Happened?
Shares of online community and discussion platform Reddit (NYSE:RDDT) jumped 6.7% in the afternoon session after investors reacted to a broader technology sector rally, which was fueled by strong earnings from artificial intelligence (AI) leaders Meta and Microsoft. The broader technology sector received a boost after industry giants Meta and Microsoft announced impressive quarterly results. Their success signaled surging demand for artificial intelligence capabilities, creating a positive wave across the market. This optimism lifted Reddit's shares as investors looked ahead to the company's own second-quarter financial results, scheduled for release after the market closed. Analysts anticipated Reddit would report significant year-over-year revenue growth of around 50%, setting high expectations for the social media firm's performance.
The shares closed the day at $161.08, up 7.8% from previous close.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 59 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 24 days ago when the stock dropped 3.1% on the news that the major indices pulled back (Nasdaq -0.8%, S&P 500 -0.77%), largely due to escalating concerns surrounding the July 9th deadline for new US tariffs, now amplified by specific announcements. Earlier in the day, President Trump confirmed that Japan and South Korea would face new 25% tariffs on their imports to the US, effective August 1st. These announcements came ahead of the broader July 9th expiration of a 90-day pause on reciprocal tariffs, which failed to produce comprehensive trade deals with most nations. This action against two major trading partners, coupled with the ongoing threat of further tariffs on countries associated with the BRICS bloc, injected significant uncertainty and apprehension into global markets. Investors were likely reacting to the increased costs for businesses, potential disruptions to global supply chains, and the broader implications for international trade relations.
Reddit is down 2.5% since the beginning of the year, and at $161.80 per share, it is trading 28.2% 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 $3,208.
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