Reddit (RDDT) stock fell more than 6% on Thursday. The decline followed an RBC analyst report that cited "challenging" feedback from small and medium-sized business (SMB) advertising agencies. Analyst Brad Erickson raised concerns about the health of this key advertising segment.
The market reaction triggered a notable investor sell-off. Intraday trading saw the stock decline by up to 8.3%. Investors are prioritizing concerns about the company's core SMB ad revenue stream.
This negative sentiment overshadowed a recent positive outlook from Wells Fargo. Wells Fargo had increased its price target for Reddit, citing momentum from AI search capabilities and data licensing deals.