In the highly saturated yet competitive social media market, Reddit (NYSE: RDDT) stands out. The platform, which aligns more closely with the style of an old-school forum, had its long-anticipated initial public offering (IPO) on March 21.
Once RDDT shares hit the secondary market, they opened at $50 — and with the exception of April and early May, they have been in the green ever since. At press time, Reddit stock is trading at $124.62 — after an impressive 70.25% rally on the monthly chart which brought year-to-date (YTD) returns to 147.06%.
For a long time, sentiment was mixed on whether or not RDDT stock could reach $100 by the close of 2024. A little over a week ago, on October 28, equity in the news aggregator site could be had for as “little” as $81.74 — but the business’s stellar Q3 2024 earnings report ignited a rapid 49.95% swing to the upside.
RDDT has been deemed a meme stock by some, and recent instances of insider selling, such as CEO Steve Huffman’s $9.3 million trade on October 15 have raised suspicions regarding long-term prospects — particularly as numerous selloffs occurred in the days and months after the IPO.
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This signal is triggered upon the reporting of the trade to the Securities and Exchange Commission (SEC).
Now, a November 5 SEC Form 4 filing has revealed that Gale Mary Porter, a member of the company’s board of directors, recently sold off a sizable quantity of shares — a potential sign that Reddit shares could be overvalued.
Porter’s sudden sale of RDDT stock came at an opportune time
In total, Porter sold 5,000 RDDT shares at an average price of $114.4 apiece. The sale netted the board member a total of $572,000. In addition, the filing includes 150 shares with a ‘G’ ownership code, constituting a bona fide gift per SEC section 16 rules and regulations.
Interestingly enough, unlike most insider transactions, this trade was not made pursuant to a 10b5-1 plan, which would have required scheduling the sale months in advance. Trades not made under such plans fall under increased regulatory scrutiny and attention.
Like any insider trading activity, the transactions are worth noting — but seeing as how Porter still holds 46,309 Reddit shares, it’s hard to make a case for this as a strong bearish signal. It would be reasonable to assume, however, that she intended and succeeded to take profits at a favorable moment.
Featured image via Shutterstock
Source: https://finbold.com/reddit-stock-hit-by-major-insider-trading-activity/