Reddit Inc. (NYSE:RDDT) stock is trading lower on Thursday, primarily due to profit-taking and a minor cooling period following a 12.5% single-day surge during the previous session.
The decline follows a sharp upward move on Wednesday, which was driven by investor optimism regarding the company’s artificial intelligence data-licensing leverage.
• Reddit shares are retreating from recent levels. Why is RDDT stock falling?
Cooling From AI Data Optimism
The previous session’s rally occurred as market participants focused on the company’s monetization potential from artificial intelligence firms’ scraping platform data. In an exclusive interview with Benzinga on Wednesday, Chief Financial Officer Drew Vollero stated that the company has content licensing deals with Alphabet and OpenAI, calling the arrangements “mutually beneficial.” Vollero added, “We believe Reddit data has added meaningful value to the performance and relevance of their models.”
Thursday’s downward movement represents short-term traders locking in these recent gains.
Rising Short Interest Dynamics
Recent market data indicate a rise in short interest for the platform. Short interest increased during the last reporting period, climbing from 13.40 million shares to 16.47 million shares. This short positioning represents 11.7% of the company’s publicly available float.
Based on the recent average daily trading volume of 4.74 million shares, short sellers would require 3.47 days to close out their short positions without triggering a sharp upward movement in the stock price.
Context on Recent Corporate Growth
The consolidation follows a period of growth for the company, which went public in March 2024. Vollero detailed to Benzinga that advertising revenue grew 74% year-over-year in the first quarter, alongside a $1 billion share repurchase program announced earlier this year. The platform currently tracks 500 million global weekly users.
Critical Levels To Watch for RDDT Stock
Even after the drop, the stock is still trading 9.8% above its 20-day SMA ($173.52) and 15.7% above its 50-day SMA ($164.62). It’s also only 3.2% above the 200-day SMA ($184.51).
The moving-average structure is mixed: the 20-day SMA is above the 50-day SMA (bullish), but the stock is still living with the “Death Cross” from March (50-day SMA below the 200-day SMA), which can keep longer-term investors cautious on rallies.
- Key Resistance: $213
- Key Support: $158.50
RDDT Stock Price Activity: Reddit shares were down 3.32% at $191.19 at the time of publication on Thursday, according to Benzinga Pro data.
Photo: Henry Franklin/Shutterstock
