Reddit falls 29.2% after weak sales guidance following quarterly results

What happened

Reddit (RDDT) fell 29.2% on October 30, 2026, because of third-quarter results and weak sales guidance that prompted a sharp market reaction. The stock opened 22.6% below the previous close and ended the day at a closing price of $91.73, as trading volume reached 6.8 times its 20-day average. The immediate market response followed the company’s report and guidance, with coverage noting the guidance and share reaction, according to CNBC and MarketBeat.

How big was the move

The decline was extreme relative to normal sessions for the stock: the move was 5.1 times a typical daily move for this stock and 28.5 percentage points worse than the Communication Services sector median, which fell 0.7% on the day. The S&P 500 fell 1.8% on the day and fell 0.6% over five sessions; Reddit’s five-session performance fell 36.4%. The stock’s beta of 2.60 shows the stock tends to move more than the market, amplifying headline-driven swings.

The technical picture

Technically, the stock sat deep in negative territory versus its moving averages. Its closing price was 37.5% below its 20-day moving average, 39.0% below its 50-day moving average and 42.4% below its 200-day moving average, and the 50-day average is below the 200-day average, a sign of a weak longer-term trend. The Relative Strength Index (14 days) was 17, below 30, a level often called oversold. The stock was 65.2% below the 52-week high and had fallen 38.7% over one month and 40.7% over three months.

Volatility measures underline the risk profile: the stock’s 60-day annualized volatility was 91%, higher than 82% of its own readings over five years. That elevated volatility helps explain why heavy news flow produced such a large intraday and multi-day move.

Fundamentals and valuation

On fundamentals, Reddit reported solid top-line growth over the four quarters through September 30, 2026. Revenue was $3.09 billion, which grew 62.2% from a year earlier. Diluted earnings per share were $4.90, which rose 181.6% from a year earlier, and gross margin was 91.5% versus 91.2% a year earlier. Operating margin expanded to 29.4% from 13.8% a year earlier, and free-cash-flow margin was 38.8%. The company reported net cash of $1.33 billion and a share count over one year that decreased by 0.4%.

Valuation metrics present a mixed picture. The stock trades at 18.7 times trailing earnings and 17.0 times expected earnings, with a free-cash-flow yield of 4.3%. PromtFinance scores rank Reddit with Growth 88 (Strong), Quality 94 (Exceptional) and Revisions 94 (Exceptional), while Value 29 (Very weak), Momentum 11 (Very weak) and Stability 23 (Very weak) lag within the sector.

Earnings and analyst expectations

The company’s last report, on October 29, 2026, showed earnings per share of $1.40 against $1.33 expected, 5.3% above estimates, marking the fourth consecutive quarter beating estimates. The average surprise over the last four reports was 36.7% above estimates, though the typical two-day reaction after recent reports was to have fell 0.3%. Management highlighted that third-quarter revenue grew 53% year over year to $895 million, with advertising revenue up 54% to $847 million, and that trailing 12-month revenue exceeded $3 billion, according to MarketBeat.

Despite the recent beats, the company issued weak sales guidance that coincided with the sharp market reaction, according to CNBC and MarketBeat. Analysts remain constructive by consensus: the consensus rating is Buy, with 66% of analysts giving a rating of Buy or Strong Buy. The consensus price target is $202.52, which is 120.8% above the closing price. There were 29 analysts with a rating in the consensus.

What to watch

• February 4, 2027: Next report date.
• The company’s sales guidance following the October 29, 2026, report, which prompted the October 30, 2026, share reaction.
• Notices from multiple law firms about investigations into disclosures related to a planned move to a logged-in-only access model, as reported by Business Wire and PRNewsWire.
• Tests of a logged-in-only experience in international markets and first-week app user retention improvements of more than 50% year over year, as reported by The Motley Fool and MarketBeat.
• Volume trends versus the 20-day average after October 30, 2026, and any changes to shareholder communications or guidance updates.