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Reddit Inc. (RDDT) Stock Drops Despite Market Gains: Important Facts to Note

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Reddit Inc. (RDDT - Free Report) closed the most recent trading day at $228.75, moving -9.36% from the previous trading session. This move lagged the S&P 500's daily gain of 0.26%. Meanwhile, the Dow experienced a rise of 0.6%, and the technology-dominated Nasdaq saw an increase of 0.25%.

Heading into today, shares of the company had gained 11.01% over the past month, outpacing the Computer and Technology sector's gain of 1.58% and the S&P 500's gain of 1.57%.

Analysts and investors alike will be keeping a close eye on the performance of Reddit Inc. in its upcoming earnings disclosure. The company is forecasted to report an EPS of $0.97, showcasing a 169.44% upward movement from the corresponding quarter of the prior year. Our most recent consensus estimate is calling for quarterly revenue of $668.52 million, up 56.3% from the year-ago period.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $2.35 per share and revenue of $2.15 billion. These totals would mark changes of +170.57% and 0%, respectively, from last year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Reddit Inc. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. Reddit Inc. is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Reddit Inc. is holding a Forward P/E ratio of 65.43. This signifies a premium in comparison to the average Forward P/E of 23.72 for its industry.

We can also see that RDDT currently has a PEG ratio of 1.7. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Software industry had an average PEG ratio of 1.43 as trading concluded yesterday.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 57, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.


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