RDDT Stock Drops To Near One-Month Lows After Meta Launches Rival App

• Forum, launched as a test app on Apple’s iOS, is part of Facebook Groups.
• The risk from this move, if successful, is a gradual erosion of Reddit’s utility: Truist
• 21 out of 32 analysts rate the stock ‘buy’, 10 rate ‘hold’ and one ‘sell’, as per data from Koyfin. 

Reddit (RDDT) share price sank 6% on Friday and extended declines after-hours following reports that Facebook parent company Meta Platforms Inc. is launching a competing standalone discussion application, signaling an aggressive push into the online forum ecosystem.

Wall Street reacted to the potential threat to the newly public company’s dominant position in interest-based community text forums. Analysts at Truist wrote in a note, accessed by CNBC,  on Friday that it’s “an attempt by the company to compete against Reddit as an online forum for public discourse” and “represents a new threat.” 

“The risk from this move, if successful, is a gradual erosion of Reddit’s utility for casual users who have less community loyalty to Reddit and simply want answers,” wrote the Truist analysts, who recommend buying the stock. “This would affect non-core Reddit users more than directly logged-in, habitual users.” 

The market anxiety stems from Meta’s pilot testing of a new platform, tentatively named "Forum." The upcoming service reportedly aims to replicate Reddit's core infrastructure by organizing user interaction around specific topics, localized communities, and threaded public discussions. 

Meta’s entry puts Reddit’s long-term public market strategy on the defensive. With its vast user base of more than 3 billion daily active users across its family of apps, a few retail traders also bet that Meta could lead to user loss for Reddit.

RDDT Q1 Earnings Highlights 

On May 1, Reddit delivered a strong first-quarter 2026 earnings report, posting revenue of $663 million—a 69% surge compared to the same period last year. The results marked Reddit's seventh consecutive quarter of revenue growth exceeding 60%. The growth was primarily driven by a 74% year-over-year increase in advertising revenue to $625 million. 

Earnings reached $1.01 per share, significantly beating Wall Street forecasts of $0.58 and climbing from just $0.13 in the first quarter of 2025.  

For the second quarter of 2026, Reddit projected revenue between $715 million and $725 million. 

RDDT Retail View 

Retail sentiment on Stocktwits was ‘bullish’ with ‘high’ message volumes. 

One user highlighted the possibility that engagement metrics could take a hit, as few users are likely to try Meta’s new app.

The stock has loat 38% year-to-date.

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