Why Reddit Stock Is Falling Hard Today

Shares of the social media company Reddit (NYSE: RDDT) were tumbling this morning ahead of the release of the company's first-quarter results tomorrow. Investors have cooled on Reddit's stock as they anticipate the company could have another disappointing quarter.

The stock price is likely also being affected by the fact that the U.S. economy contracted in the first three months of the year, its first quarterly decline since 2022.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Reddit's stock fell by as much as 11% today and was down by 7.7% as of 11:43 a.m. ET on Wednesday.

Investors are heading for the doors before the Q1 release

The company will release its first-quarter results after the closing bell tomorrow, but many investors aren't sticking around to see the results. A growing skepticism has surrounded the stock since the beginning of this year, with shares down 31% year to date.

The pessimism began after Reddit reported mixed results for the fourth quarter. Sales rose by 71%, but the company's growth in global daily active unique users fell short of analysts' expectations, reaching 101.7 million -- below the consensus estimates of 103.1 million.

And Wall Street expects some disappointing first-quarter results as well. The analysts' consensus earnings estimate is $0.03 for the quarter, which would be a nearly 90% decline from the year-ago quarter.

There's also general negativity toward tech stocks right now against the backdrop of President Donald Trump's tariffs and the affect they're having on the economy. Data released today showed gross domestic product (GDP) fell by 0.3% in the first quarter, the first decline in three years.

Economists had been expecting growth of 0.4%, so the decline is sparking fears that a recession may be around the corner.

Investors will know more tomorrow

Large swings in share prices for many stocks have become commonplace recently, and it's likely that Reddit investors could react strongly to first-quarter results tomorrow, positively or negatively.

Unfortunately, investors can't do anything about the broader tech sell-off right now, but it's good to remember that amid the turmoil, it's best to focus on how the company is performing and not get caught up in panic buying or selling based on daily market moves.

Investors should pay close attention to what management says about user growth as well as any comments about how the current macroeconomic conditions may affect the company before making decisions on the stock.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $607,048!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $668,193!*

Now, it’s worth noting Stock Advisor’s total average return is 880% — a market-crushing outperformance compared to 161% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.