Reddit stock fell 7.5% in premarket trading on Tuesday after Cleveland Research analyst Ross Walthall issued cautious comments about the social media platform’s growth prospects, adding to negative sentiment around the company.

Meanwhile, Reddit Chief Technology Officer Christopher Brian Slowe, sold 11,900 shares of Class A Common Stock on January 22, 2026, according to a recent Form 4 filing. The sales were executed in multiple transactions with prices ranging from $210.95 to $215.70, resulting in a total value of $2,976,561.

Walthall’s report highlighted concerns about moderating growth forecasts for 2026, citing a slowdown in new advertisers and less conviction about scaling up spending from existing clients. Large U.S. partners appear more likely to reduce forecasts, though European and smaller agencies maintain steadier outlooks.

The analyst also warned of increasing competitive pressures facing Reddit. "Our research was less optimistic on the pace of growth into 2026 – we saw reduced forecasts from large US agencies, somewhat offset by steady outlooks for European & smaller US partners," Walthall noted.

While Reddit’s return on investment sentiment remains positive, with 59% of partners beating ROI targets, this represents a decline from 76% in the previous quarter. The report suggests broader adoption of Conversion API (CAPI) is needed to unlock more direct response advertising spending.

Cleveland Research now projects Reddit’s 2026 revenue growth at 36% YoY ($2.9 billion), below the consensus estimate of 39.1% ($3.0 billion). The firm maintained slightly more optimistic projections for the current quarter, modeling fourth-quarter revenue growth of 56.4% YoY compared to consensus expectations of 55.7%.

The report also highlighted competitive threats, noting advertisers expect TikTok and Snap to compete more aggressively for 2026 budget allocations, with additional potential risk from ChatGPT test budgets gaining share.