Is Reddit's (RDDT) post-IPO boom over? Most analysts say 'buy the dip'

After going public in 2024 and soaring a solid 350% in less than a year, reality came crashing down on Reddit (RDDT) last week.

In response to the latest earnings numbers, the stock shed nearly a third of its value. But many analysts taking a long-term outlook on the stock aren’t ready to throw in the towel.

In fact, some say now might be the perfect time to buy.

How bad did it get?

Despite some reassurances from CEO Steve Huffman that things were turning around, investors spent the weekend without any real evidence of an impending rebound. Here’s a look at how the stock performed after the report:

• Share prices fell 5% during the first trading day after the report was released

• Another 7.5% drop came Thursday in response to a new FTC inquiry

• A five-day combined loss of 19% was Reddit’s biggest since last April

• By Tuesday, shares were 30% lower than the all-time high set on February 7

And it didn’t instill much confidence when Huffman authorized the sale of more than $70 million in Reddit shares on Tuesday—far exceeding his previous high of just under $3 million.

What caused the sell-off?

In the span of just a few days, Reddit wiped out all of the stock gains it had recorded in 2025 up to that point.

Even though the slide began in response to the company’s latest earnings report, that was just one of the contributing factors. In fact, the report wasn’t all that bad—at least in terms of revenue growth.

Year-over-year revenue was up more than 70% and ad revenue increased by 60%, boosted in large part by international users.

Investors were less enthusiastic about user numbers, though—which increased overall during the most recent quarter but still came up short when compared to expectations.

Adding to that disappointment was the FTC’s decision to conduct an inquiry into the policies tech platforms use to moderate content and/or ban users who violate their terms.

That news sent other social media companies into a tailspin, too, including Meta (META) and Snap (SNAP), which shed 1.3% and 0.9%, respectively, on Thursday.

Should you "buy the dip"?

After a particularly strong 2024, Reddit’s recent dip might sound like an ideal opportunity to get in or increase your stake in this company. Market insiders think that’s a solid plan.

Out of 24 analysts who cover Reddit, 15 labeled the stock a “buy,” another eight said it’s a “hold,” and just one called it a “sell.” After all, Reddit is still trading well over 200% higher than where they were six months ago.

If Huffman is right that an audience decline late last year was “triggered by a periodic algorithm change” and the numbers “bounced back in January,” Reddit could be in for a quick rebound.