Reddit Stock: What the Q3 Numbers Actually Mean for Investors

It’s the kind of earnings report that makes investors feel smart. Reddit ($RDDT) just blew past Wall Street expectations, posting revenue of $584.91 million against a forecast of $549.63 million. That’s a 68%—to be more exact, 67.3%—year-over-year growth. Daily active users surged 19% to 116 million. The stock, naturally, popped over 17% in after-hours trading.

On the surface, this is the validation everyone was waiting for. The quirky, chaotic corner of the internet has seemingly found its footing as a public company. The narrative is clean: user growth is strong, ad revenue is booming, and the future looks bright. News that Reddit Stock Surges 17% After Q3 Earnings Beat Expectations certainly helped, and Wall Street is buying it. We’ve seen 11 firms issue buy ratings in recent months, with price targets reaching as high as $300. Needham, Citigroup, Morgan Stanley—they’re all on board. The consensus is clear: Reddit is a growth story hitting its stride.

But my job isn’t to read you the headlines. It’s to look for the discrepancies—the points where the narrative and the underlying data diverge. And in Reddit’s case, there’s a divergence so profound it demands attention. While the public market is buying the story, the people who know the company best—its top executives—are selling. Hard.

The Public Narrative vs. The Private Ledger

Let's first establish the bull case, because it's not without merit. A nearly 70% jump in year-over-year revenue is formidable for any company. It suggests Reddit is successfully monetizing its massive user base, a puzzle it struggled with for years. The platform’s unique, community-based structure makes it a treasure trove of specific, intent-driven conversations, which is gold for advertisers (and potentially for training AI models, a long-term lottery ticket investors love). When you see analysts from JMP Securities and Piper Sandler slapping "Market Outperform" and "Overweight" ratings on the stock, they're looking at these top-line numbers and a user base that is not only large but deeply engaged.

The market is a storytelling machine, and right now, it’s telling a very compelling story about Reddit. It’s a story of a company that has finally cracked the code, transforming its cultural capital into financial capital. The stock’s performance reflects this optimism. Institutional investors seem to agree, with 446 funds adding the stock to their portfolios in the last quarter versus 302 who decreased their positions. It’s a picture of broad-based confidence.

But then you look at the insider trading filings. And the picture changes. Drastically.

Over the last six months, insiders at Reddit have executed 321 trades on the open market. Of those, the number of purchases was zero. The number of sales was 321.

This isn't a trickle; it's a flood. CEO Steve Huffman sold over 400,000 shares for an estimated $59.7 million. COO Jennifer Wong sold shares worth over $54.2 million. The CTO, CFO, Chief Legal Officer, and Chief Accounting Officer have all been consistent, aggressive sellers, collectively cashing out tens of millions more. I've looked at hundreds of these filings over the years, and while post-IPO selling is standard procedure, the sheer one-sidedness of this activity is an outlier. It’s the kind of data that makes you sit up straight in your chair.

This presents a fundamental contradiction. The people steering the ship are telling their passengers that the destination is paradise, but they seem to be quietly selling their own tickets. It’s like the architect of a skyscraper giving public tours celebrating its structural integrity while privately selling his own penthouse apartment in the building. It doesn’t necessarily mean the building is going to collapse, but it forces you to ask a very pointed question: What does he know that we don’t?

Interpreting the Great Divide

So, how do we reconcile these two opposing data sets? The bull case rests on public performance metrics. The bear case rests on the private actions of the most informed players.

One explanation is benign. Executives are often compensated heavily in stock, and after an IPO lock-up period expires, it's normal for them to diversify their personal wealth. No one can fault someone for wanting to turn paper wealth into a house or a diversified portfolio. This is the argument you’ll hear, and it’s a valid one (to a point).

But the scale and uniformity here challenge that simple explanation. We're not seeing one or two executives trimming their positions. We are seeing the entire senior leadership team systematically liquidating their stock holdings with zero offsetting purchases. If they believed the stock was poised for another 50% or 100% run-up, as the analyst price targets suggest, would they be selling this aggressively? Is it possible they see the current market enthusiasm and high valuation as a prime opportunity to exit, rather than a starting point for future growth?

This isn't about predicting a crash. It's about risk assessment. The public data—the earnings report—is backward-looking. It tells you what happened last quarter. Insider sales, on the other hand, are a forward-looking indicator. They represent the sentiment of people with the deepest possible insight into the company's operations, competitive landscape, and internal forecasts. When their actions are in complete opposition to their public pronouncements of a bright future, it’s a red flag.

The core question isn't whether Reddit is a good platform. It is. The question is whether RDDT, at its current valuation, is a good investment. The market says yes. The analysts say yes. The C-suite’s actions, however, suggest a different answer.

Watch What They Do, Not What They Say

At the end of the day, an investor has to decide which dataset carries more weight. Is it the polished, public-facing narrative of growth, validated by a strong quarterly report? Or is it the stark, unfiltered data from the insider ledger that shows a unanimous and sustained exodus of stock by the company's leadership? For me, the answer is clear. While earnings reports can be impressive, they are a snapshot in time. The consistent, one-way flow of insider sales is a trend, and it’s a powerful signal about their conviction—or lack thereof—in the company’s long-term stock performance. The answer to the question, "Should you care?" is an unequivocal yes. This is precisely the kind of data you should care about most.