TLDR
- Reddit stock fell about 8% on Monday after a 12.6% surge the previous Friday
- The drop is largely profit-taking ahead of official S&P 500 inclusion on August 18
- Index funds were expected to complete bulk RDDT purchases in Monday’s closing auction
- Raymond James raised its price target to $205, maintaining a Strong Buy rating
- Bank of America data showed Reddit’s U.S. revenue per user grew 50% year-over-year to $11.30 in Q2 2026
Reddit (RDDT) stock fell around 8% on Monday, trading as low as $176.84, giving back a chunk of the 12.6% gain it posted on Friday after the company confirmed its S&P 500 addition effective August 18.
The pullback was widely expected. When a stock gets added to a major index, passive funds need to buy in before the effective date. That buying pressure often gets front-run by traders, who pile in early and then sell once the event arrives. That is exactly what played out with Reddit.
By Monday, the mechanical buying catalyst was essentially used up. Index funds were set to execute the bulk of their RDDT purchases during Monday’s closing auction, meaning the event-driven premium had already been priced in by the time most retail investors woke up.
Reddit is replacing AvalonBay Communities in the S&P 500. It will become only the second pure-play social media stock in the index, alongside Meta Platforms.
Analyst Still Sees Upside
The selloff did not shake Raymond James analyst Josh Beck. He raised his price target on RDDT to $205 from $200 while keeping his Strong Buy rating intact. Beck ranks 550 out of more than 12,474 analysts tracked by TipRanks, with a 56% success rate on Reddit specifically and an average return of 14.3% per rating over a one-year period.
Beck’s team built what he called a “tree analysis” to break down Reddit’s daily active users across direct traffic and Google-driven traffic. He flagged layout and click-through-rate issues as ongoing challenges, particularly around Google’s AI Overviews. Still, he sees potential upside from improvements to Reddit’s recommendation systems, which could improve conversion from weekly active users to daily active users.
He also pointed to AI chatbot traffic as a future tailwind that could change the narrative around user growth.
Revenue per User Climbs
A Bank of America report released Monday showed Reddit’s U.S. average revenue per user hit $11.30 in Q2 2026, up 50% year-over-year. That was the highest growth rate among major social media platforms tracked in the report.
The firm did flag limited visibility into potential headwinds from AI-driven search changes, a concern that Reddit management itself raised during the Q2 earnings call. The platform’s dependence on Google search for user acquisition remains a watch point for investors.
The broader market gave Reddit little cover on Monday. The S&P 500 was up just 0.1%, the Nasdaq gained 0.5%, and the Dow slipped 0.2%.
On Wall Street, RDDT carries a Moderate Buy consensus rating based on 15 Buys and nine Holds, according to TipRanks. The average price target sits at $217.74, implying about 32% upside from Monday’s levels.
Reddit has gained roughly 12% over the past six months, driven by rising engagement trends and growing optimism around AI-driven traffic.
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