New York, February 6, 2026, 15:37 EST — Regular session.
- Reddit shares slipped roughly 8% in afternoon trading, bouncing between $170.74 and $138.37.
- Company topped quarterly forecasts, projected Q1 revenue ahead of estimates, and cleared up to $1 billion for buybacks.
- Traders are watching to see if ad growth and AI-powered tools will hold as the stock’s volatility continues.
Reddit Inc shares gave up an early surge and skidded roughly 8% lower on Friday, wiping out their post-earnings jump. The social media stock slipped 8.3% to $138.44 by the afternoon, after initially climbing as much as 13% before tumbling to a session low close to $138—even with its first-quarter revenue outlook topping Wall Street forecasts.
Reddit’s sharp reversal stands out—investors are treating it as a high-velocity ad play, and any sign of a slowdown gets hammered. Wild swings this week lay bare just how nervous traders are around these fresh, high-multiple internet stocks.
U.S. stocks jumped Friday, sending the Dow to the 50,000 mark, though action around the “AI trade” stayed unsettled after a tough patch for software and data shares. “This trade has been volatile,” said Ross Mayfield, investment strategy analyst at Baird, citing a push-pull between appetite for AI products and worries about valuations or margins. 1
Reddit late Thursday projected first-quarter revenue between $595 million and $605 million, beating the $577.2 million consensus from LSEG. Adjusted EBITDA, with interest, taxes, and certain non-cash items excluded, is seen landing in the $210 million to $220 million range. The company credited new AI-powered tweaks to its ad platform for pulling in advertisers, and rolled out its inaugural share buyback plan—up to $1 billion. Shares jumped roughly 4% in after-hours action, then slid Friday. “Expectations were already high coming into the quarter, but the results still surprised,” Emarketer’s Jeremy Goldman said. 2
Reddit’s latest quarter saw revenue surge 70% to $726 million, with ad revenue up even faster—75%—reaching $690 million. Daily active uniques, the metric for users showing up each day, increased by 19% to 121.4 million. CEO Steve Huffman called this “the next era of Reddit,” pointing to sharper execution, global growth ambitions, and new product moves anchored on “real people and conversations.” 3
Despite the stock’s drop, some analysts held a positive view on Reddit’s execution—though price targets came down. Piper Sandler’s Thomas Champion lowered his target to $205 from $290 but left his overweight call unchanged, pointing to a strong quarter and what he called “phenomenally well” execution by management, The Fly reported. 4
Reddit spelled it out in its latest 10-K: ads and site traffic remain the key issues for investors. Nearly 94% of 2025 revenue relied on advertising, the company disclosed in Friday’s annual filing. There’s also a warning—shifts in search engine algorithms might drag on traffic. Plus, Reddit pointed to its multi-class share structure, which keeps voting power concentrated among pre-IPO shareholders. 5
Even so, the stock could remain choppy in the short run. There’s no obligation for the company to buy back shares on a fixed timetable, and if marketers cut spending, ad budgets might shrink fast—especially with expectations already running high and little room for error.
Traders are eyeing whether the post-earnings dip can level out by the close, and if early signs on ad demand line up with the upbeat guidance from the company. The next key marker: Reddit’s first-quarter results, covering the period through March 31, where the company will have to demonstrate that its AI ad tools are actually driving sustainable spending and consistent user growth.
