How to trade Reddit stock: a complete guide

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What is Reddit?

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit is one of the largest and most popular social media platforms, focused on online communities and discussion. Initially built as a site where users could post and vote on links, Reddit quickly grew into a sprawling network of ‘subreddits’, individual forums dedicated to almost any topic imaginable, from technology to niche hobbies. The platform’s democratic voting system, where users upvote or downvote posts, has helped to shape discussions and trends in unique ways.

Reddit’s early years saw the introduction of features like the karma system, giving active users more influence, and the growth of communities (or ‘subs’) where people gather to discuss their interests. By 2017, Reddit had become a widely influential site, attracting over 300 million active users. Known for its anonymous and community-driven nature, the platform has played a significant role in internet culture, memes, and even impacting financial markets through forums like r/WallStreetBets.

As of recent years, Reddit has continued expanding its platform, attracting users and advertisers alike. March 2024 brought the much-anticipated Reddit IPO, with the business listing on the New York Stock Exchange in March that year. The company’s revenue in 2023 was $804m.

What is Reddit’s share price history?

Reddit’s share price history has seen significant shifts since its IPO, reflecting the company’s evolving role in digital communities and social media.

Reddit's stock (RDDT) debuted on 21 March 2024 at $34 per share for a valuation of $6.4bn. The share price rose quickly to an intraday high of $57.80 and closed at $50.31 on the first day, representing a significant 48% increase.

The price gained momentum over the following months, rising to around $73 in July, but experienced a correction to around $50 in August following its second earnings announcement, with no new large data licensing clients announced at the time.

Since then, the stock has fluctuated with market sentiment, driven by quarterly results and investor interest in tech and social media stocks. By November 2024, shares had surged to $116 following Reddit's first profitable quarter, fuelled by better-than-expected revenue and optimism over its AI capabilities. This impressive growth highlighted Reddit's volatile but positive market reception as a new public company and a unique social media platform with expanding AI tools​. However, as seen in the early days of social media mainstay Meta, there will be significant swings ahead.

*Reddit stock price data from Macrotrends. Correct as of 3 November 2024. Historical price data is inclusive of the effect of stock splits.

Past performance is not a reliable indicator of future results.

What factors might affect the Reddit live share price?

Reddit’s share price can be impacted by a range of key sector-specific fundamental events. Here are a few of the main factors that traders should watch out for.

User growth and engagement:

As a community-driven platform, Reddit’s value hinges on the number of active users and their engagement levels. Any shifts in user growth rates, subReddit activity, or user demographics could impact investor sentiment and, by extension, Reddit’s share price. Sustained growth in active communities would likely boost confidence, while a decline might dampen it.

Advertising revenue:

Advertising is Reddit’s primary revenue source, making its performance critical to the stock. This revenue can be influenced by changes in advertising policies, effectiveness of ad placements, competition from other social media platforms, and overall economic trends that impact ad spending. Tracking ad revenue growth, especially in high-performing subReddits, will be key.

General financial performance/earnings reports:

Reddit’s quarterly earnings reports provide insight into the company’s sales performance, profitability, and margins. Positive earnings reports may bolster the stock, while any downturn in revenue or profitability could lead to price declines. Financial guidance along with market analysis during this key period can help you understand progress and future outlook.

Competition/market share:

Reddit operates in a competitive social media landscape, facing challenges from platforms like Twitter, TikTok, and Discord, each vying for users and advertisers. Reddit’s ability to maintain or grow its market share amidst such competition will be a factor to watch, as shifts in competitive positioning could sway the stock’s performance.

Innovation and product development:

Reddit’s ability to evolve and introduce new features plays a vital role in attracting and retaining users. For instance, the development of live audio chats and video content has recently expanded the platform’s reach. Monitoring Reddit’s ongoing investments in product development and adaptability to trends in online communities can provide insight into its growth trajectory.

Regulatory environment:

Like other social platforms, Reddit is subject to regulatory scrutiny, particularly regarding content moderation and data privacy. Any changes in laws or increased scrutiny over community guidelines could affect operations and, consequently, share price volatility. Investors may want to consider regulatory developments when assessing Reddit's long-term outlook.

What are Reddit’s stock trading hours?

Reddit’s stock trading hours are Monday to Friday from 2:30pm to 9:00pm (UTC) based on its listing on the New York Stock Exchange.

If you choose to trade CFDs, you can follow the Reddit stock performance live in US dollars with the comprehensive Reddit share price chart.

Monitoring the company’s activity can help you to keep an eye out for any key fundamental or technical events that may affect short-term movements in the share value.

How to trade Reddit shares with CFDs

You can trade Reddit shares using a derivative product such as a contract for difference (CFD). This allows you to speculate on the Reddit stock market price, without actually owning the physical share. A CFD is a financial contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.

Unlike physical share ownership, you can either hold a long position (speculating that the price will rise) or a short position (speculating that the price will fall). CFD trading involves various trading strategies, such as day trading and swing trading. Often, traders inform their decisions using fundamental analysis, meaning the macroeconomic influences of the share price. Others use technical price action, which involves seeking patterns based on historical price movements.

A key difference between buying physical Reddit shares and trading through a derivative is the leverage that can be employed with the latter. CFDs are typically traded on margin, which means that a trader has exposure to larger positions with a relatively small outlay. Using this method, both your profits and losses are amplified, making leveraged trading risky. You can learn how to trade shares in our comprehensive guide.

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