Reddit Inc. (NYSE:RDDT) has turned heads this year, boasting a 167% gain year-to-date, with recent months showing an even steeper climb.
But with a director's hefty share sale making headlines, is Reddit's rally unstoppable, or are insiders eyeing a peak?
The Insider Alert: Michael Seibel's Million-Dollar Move
Reddit director Michael Seibel recently unloaded 82,819 shares in multiple transactions, raking in around $9.22 million. This wasn't just any routine sell-off, either. Seibel's trades weren't part of a pre-planned 10b5-1 trading plan, a tool insiders often use to sell in line with SEC compliance.
With share prices in these transactions ranging from $111.22 to $112.09, Seibel still held onto a fair chunk of shares, including 55,128 directly and another 9,134 indirectly through a trust.
And he's not alone. Reddit CEO Steve Huffman offloaded stock worth $9.3 million, while board member Mary Porter gained $572,000.
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Reddit Stock: Riding The Meme Stock Wave
As a newly-minted meme stock, Reddit's volatility has been almost as popular as its forums. Investors are drawn to Reddit's spectacular growth story, with the third quarter marking its first-ever profit and robust ad revenue gains.
User engagement continues to explode, and strategic partnerships with AI powerhouses Google and OpenAI are keeping Reddit on the innovation fast track.
An AI translation tool and impressive content licensing deals are feeding this growth frenzy, expanding Reddit's reach and fueling bullish sentiment.
But Reddit's insider sales raise a yellow flag amidst these green signals. Reddit's executives seem keen on cashing out while the market is hot, a trend that's also lured in short sellers betting on a cooldown.
Chart Signals All Signs Point To Buy—For Now
Chart created using Benzinga Pro
Technically, Reddit stock is hitting all the right bullish signals. Its share price is well above the eight, 20 and 50-day simple moving averages, suggesting strong buying pressure.
With a current price of $135.08 per share, Reddit stock is also trading above key simple moving averages, signaling continued bullish momentum.
Add in an RSI of 81.49, and Reddit is looking slightly overheated—likely ripe for short-term pullbacks, but still in bullish territory overall.
Reddit's Bull Rally Has Caution Flags
Reddit's impressive growth story and technical strength make it a tempting buy—but the insider sales hint that company leaders might see a near-term cap. While Seibel and Huffman still hold significant stakes, they're clearly not shying away from cashing in, suggesting investors keep their finger close to the sell trigger as well.
For now, Reddit is a bull's playground. But with the stock soaring on meme-fueled gains and revenue milestones, the insider exits might be the cue for cautious investors to watch for the next dip before piling in further.
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