Reddit Inc. (RDDT) saw its stock settle at $125.56 on Monday, March 17, 2025, after fluctuated from an intraday low of $119.92. This fluctuation reflects the market's reaction to Reddit's newly expanded partnership with Google. According to reports from Reuters, Google is now integrating Reddit content more efficiently across its products, granting Reddit access to Vertex AI for enhanced search capabilities.
This augmented alliance is intended to improve information relevance for users, enhancing the overall user experience on the platform. Despite the potential benefits from this partnership, concerns have been raised by James Cordwell of Redburn Atlantic, who issued a 'Sell' rating following his coverage initiation of Reddit. Cordwell highlights the platform's vulnerability due to its dependence on Google Search traffic, noting the loss of 600,000 daily active users (DAUs) from traditional search methods linked to algorithm shifts.
Cordwell pointed out the significance of the 600,000 DAU drop observed during the fourth quarter, indicating how algorithm changes at Google directly crippled Reddit’s audience metrics—a pivotal element for any internet platform's health. He described Reddit’s user growth as stagnant over the last six months, which compounds the risk posed by reducing reliance on Google traffic.
Nevertheless, the new Google partnership aims to make the platform 'stickier' for users through the advanced capabilities of Vertex AI. Users can anticipate more relevant answers as Google presents Reddit content within its ecosystem. Yet, Cordwell sees limited long-term structural improvement for Reddit, expressing skepticism about the partnership's potential to significantly boost organic user growth efforts.
Following Corderwell's analysis, Reddit shares, which closed down 2.07% at $125.56, reflect the anxiety among investors balancing optimism against real challenges. The stock's sharp movements coupled with changing analyst sentiments amplify concerns about the long-term sustainability of Reddit’s traffic-driven business model. Indeed, the integration of Reddit's API with Google is perceived as both advantageous and troublesome, with risks attached to algorithm modifications.
On another front, several major investors have recently disclosed their stakes in Reddit, adding another layer to the stock's popularity among institutional players. The fourth quarter saw Tredje AP fonden acquiring 80,349 shares, valued at approximately $13,132,000. Meanwhile, FMR LLC significantly expanded its hold by 302.8%, now owning over 12 million shares valued at around $801 million after adding over 9 million shares during the last quarter.
Also noteworthy was the acquisition by Jennison Associates LLC, amounting to $494 million, alongside Holocene Advisors LP, which lifted their holdings significantly to over 3 million shares. There’s considerable movement around Reddit stock, with Point72 Asset Management also making substantial increases to 2,296,068 shares valued at approximately $151 million.
Insider transactions have been active as well, with Director David C. Habiger purchasing 774 shares on March 12, 2025, at $130.36 per share, which added to his stake. After this purchase, Habiger's total ownership reached around 30,808 shares, equal to approximately $4 million. On the other hand, CEO Steve Ladd Huffman sold 14,000 shares at $165.33 on December 31, 2024, for just over $2.3 million, highlighting how insider trading remains vibrant amid market fluctuations.
The broader outlook for Reddit continues to be marked by its fascinating intersection with tech giants and dealings with major investors. Reddit's reliance on Google Search for user engagement raises fears, especially considering the shifting sands of algorithm-driven visibility. This reliance has produced varying reassessments from analysts, including Cordwell’s stark target price of $75—a considerable fall from its closing price on Monday.
Market analysts have differing ratings on Reddit, with some attributing 'buy' ratings and higher targets ranging beyond $200 to other notable firms. Morgan Stanley and Piper Sandler noted upward adjustments, indicating polarized views amid the changing market dynamics.
The stock closed down by $6.57 at $121.64, marking significant trading volume of 2,427,552 compared to its average. Reddit's market capitalization adjusts to around $22 billion, with both achievements and hardships creating diverse narratives around its potential trajectories.
All considered, Reddit's status reflects its duality as both advancement and vulnerability amid the intertwined destinies with Google and the stock market. With the breadth of factors influencing its performance and the analytics echoing varied perspectives on future pathways, Reddit stands at a crossroads of tension and opportunity.
