Reddit shares were on track to log their worst day in almost a year on Thursday as the stock dropped more than 9%. It is not immediately clear what led to the exaggerated selloff.
Following a lower opening of 1.5%, Reddit share volume increased as the stock continued the decline to mark the single largest drop in Reddit price since March 2024.
On Thursday, the Federal Trade Commission launched a Request for Information (RFI). The request is to better understand how technology platforms deny or degrade users' access to services based on the content of their speech or affiliations, and how this conduct may have violated the law.
The RFI did not mention any specific companies.
Reddit shares have seen a 25% decline over the last eight trading days. Shares fell from their all-time highs of $225 to the current price of $175, inflicting technical damage along the way.
Today’s selloff moves the stock below its bullish 50-day moving average.
The stock’s last break below this key trendline occurred in July 2024. That move was preceded by a 20% decline in Reddit shares. The move below its 50-day trendline in July also preceded a further 20% drop in the stock’s value before posting a tradable bottom.
Today’s bearish trading activity suggests that Reddit, and other technology stocks, are setting up for further declines as the market moves towards the end of February, a historically volatile trading period.
Investors should expect that Reddit shares will search for support at $150, another 15% drop from today’s price. Failure for the $150 price to hold will result in increased selling to a target of $125.
Shares of Reddit maintain a long-term bullish outlook with a target price of $250.00
