Wells Fargo downgraded Reddit stock to "equal weight" and slashed its price target
Reddit Inc (NYSE:RDDT) stock is under pressure this morning, last seen 5% lower at $107.52, after Wells Fargo downgraded the stock to “equal weight” from “overweight” and slashed its price target to $115 from $168. The brokerage firm warned that disruptions in search traffic could become permanent as Google rolls out AI-integrated search, posing a long-term headwind for Reddit’s visibility and traffic-based monetization.
This bear note appears overdue and could open the floodgates for more. Despite Reddit stock’s 30.7% year-to-date deficit, 15 of the 23 analysts in coverage still rated it a “buy” or better ahead of today’s dip. Meanwhile, the equity’s average 12-month price target sits at $160.36 -- a 41.6% premium to Friday’s close -- suggesting ample room for downward revisions.
Options traders may also be forced to rethink their optimism. Reddit’s 10-day call/put volume ratio of 4.07, per the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ranks in the 100th percentile of annual readings, indicating calls have been picked up at the fastest rate all year.
RDDT's downtrend remains intact, down 45.3% over the last three months and on pace for a third consecutive daily loss. The $100 level, which previously caught pullbacks in April, could serve as a short-term floor. However, the 20-day moving average has flipped into resistance, with several other trendlines stacked overhead, making upside progress more difficult for the bulls.