Monster insider trading alert for Reddit stock

Despite its strong performance, Reddit’s (NYSE: RDDT) stock has been plagued by its suspected meme stock status and the lack of a lockup period for its executives after the initial public offering (IPO).

Such a setup ensured significant volatility for the shares throughout their times in the stock market and the quick introduction of insider trades. One of the most prolific RDDT stock sellers has, without a doubt, been the company’s CEO, Steve Huffman.

Huffman has been actively trading Reddit shares in recent months. His most recent activity – reported for October 15 – involved an indirect non-open market purchase of just over 124,000 shares and the sale of an equal number.

While the nature of the purchase makes gauging the specifics of the transaction difficult, it is known that the CEO sold 14,000 RDDT shares at an average price of $75.16 and 110,408 at $75.10.

In total, the executive made approximately $9.3 million from the sales.

Insider sales of RDDT shares after significant Reddit stock rallies

Reddit’s executives became known for being keen to take advantage of the stock’s positive movements quickly after the IPO. As Finbold reported in late March 2024, multiple senior officers started selling RDDT stock just days after the offering.

At the time, CEO Huffman made approximately $16 million from the insider activity, CTO Christopher Slowe just under $6 million, COO Jennifer Wong also about $16 million, and CFO Andrew Vollero slightly more than $2 million.

The October 15 sale followed a strong Reddit stock rally. Specifically, RDDT shares are up 25.09% in the last 30 days, 88.44% in the last six months, and 64.86% since trading started on March 1.

Still, the insider activity, along with being the generally unconcerned automatic type, does not indicate a halt to the rally, based on the data available at press time. Indeed, the CEO’s sales were reported as executed at just above $75, while Reddit stock price today, six days later, stands at $81.95.

What is next for Reddit stock?

Finally, CEO Huffman’s sale came just weeks ahead of one of Reddit’s pivotal moments in its history as a publicly traded company – the upcoming earnings report, scheduled for October 29.

Still, investors do not appear to have much to worry about.

 Despite its relatively short track record, Reddit has so far managed to reliably beat forecasts. 

For example, the first-quarter (Q2) report revealed a per-share loss of $8.19 instead of the predicted $8.55, while in Q2, it stood at $0.06 and not $0.31. At press time, the company is expected to report a loss of $0.08.

Wall Street experts have also been generally optimistic about the ‘front page of the internet.’ For example, Jeffries initiated its coverage of RDDT shares early in October with a positive ‘buy’ rating and a price target set at $90 – just shy of the $100 that was speculated as a year’s end goal shortly after the IPO.

In its initial assessment, Jeffries assessed the use of content on the platform for training artificial intelligence (AI) programs positively, despite the ‘glue-on-pizza’ incidents earlier in 2024.