TLDR
- Reddit (RDDT) stock jumped over 6% Friday after director Sarah Farrell purchased $7.48M worth of shares across two transactions
- Farrell bought 50,500 shares between February 10-11 at prices ranging from $139.27 to $149.79, increasing her holdings to 58,399 shares
- The insider purchase came days after CTO Christopher Slowe sold 11,464 shares worth $1.72M under a pre-arranged Rule 10b5-1 trading plan
- Reddit stock is down 39.4% year-to-date with shares trading around $148 per share
- Investors typically view insider purchases as a positive signal that management sees value in the stock at current price levels
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Reddit (RDDT) stock climbed more than 6% Friday afternoon after board member Sarah Farrell disclosed a multi-million dollar share purchase. The buying activity caught investor attention during a volatile trading session.
Reddit, Inc., RDDT
Farrell acquired 50,500 Class A shares across two separate transactions executed on February 10 and 11. The purchases averaged $148.16 per share, totaling approximately $7.48 million.
The transactions occurred at prices between $139.27 and $149.79 per share. Following these purchases, Farrell’s stake in the company increased to 58,399 shares.
The timing of the purchase is particularly interesting given Reddit’s stock performance this year. Shares are down 39.4% year-to-date, suggesting Farrell may see the current price as an attractive entry point.
Market participants typically interpret insider buying as a bullish signal. Directors and executives have access to information about company operations that retail investors don’t see.
When insiders put their own money into company stock, it often indicates confidence in future prospects. The size of Farrell’s purchase makes it especially noteworthy.
Mixed Insider Activity
The director’s purchase wasn’t the only insider transaction making headlines this week. CTO Christopher Slowe sold 11,464 shares for a total of $1.72 million just days earlier.
However, Slowe’s sale was executed under a Rule 10b5-1 trading plan. These plans allow company insiders to sell predetermined amounts of stock at scheduled times.
The plans are established when the insider doesn’t possess material non-public information. They’re designed to prevent accusations of insider trading.
This distinction is important because Rule 10b5-1 sales don’t necessarily reflect an executive’s outlook on the stock. They’re often set up for personal financial planning or diversification purposes.
Current Trading Dynamics
Reddit shares currently trade with an average volume of 4.97 million shares daily. The stock’s market capitalization stands at $26.65 billion.
Technical indicators show a “sell” sentiment signal for the stock. This suggests some traders remain cautious despite the recent insider purchase.
The stock’s 39.4% decline this year has created a challenging environment for shareholders. Friday’s 6.55% gain provided some relief but shares remain well below previous highs.
Farrell’s $7.48 million investment represents a substantial vote of confidence in the platform. The purchase comes as Reddit continues navigating the competitive social media landscape.
The director’s willingness to deploy millions of dollars into company shares at current levels sent a clear message to the market Friday.
