Reddit shares busted out of the gate Thursday, showing an immediate gain of more than 60% as the long-awaited initial public offering finally turned the social media site into a publicly traded company.
Shares opened at $47 each—and quickly jumped to $55. The question is: Can the company hold (and build upon) those gains?
Reddit has warned investors that there are a number of factors that could impact its stock. It’s not a profitable company and user bases are fickle things that could disappear without a lot of warning. But one of the most curious risks it mentioned was its own users.
In its IPO filing, Reddit cited its own r/wallstreetbets community could be problematic, writing, “Given the broad awareness and brand recognition of Reddit . . . the market price and trading volume of our Class A common stock could experience extreme volatility for reasons unrelated to our underlying business or macroeconomic or industry fundamentals.”
So as Reddit begins its next phase as a publicly traded company, what is the WSB crowd saying about it?
It was, as you might expect, a little bit of everything. WallStreetBets rarely agrees on anything completely, with some notable exceptions, such as driving up the price of meme stocks like GameStop and AMC and their disdain for hedge fund companies. But there were some underlying themes.
Several WSB users showed off their purchase orders for Reddit shares, as the company offered its users and moderators the opportunity to purchase a sizable percentage of its shares at IPO prices, something that’s usually restricted to institutional investors. They did so with a sense of humor (and a bit of trepidation), with such thread titles as “Caviar or Wendy’s dumpster tonight boys” and “Hold onto your butts.”
Other users offered congratulations, shouted warnings, and just had fun at the company’s expense. The big question is: Will those users “hold” the stock—or pump and dump it?
Here are a few of the comments that stood out.
“My guess is it will go like Roblox, a bit of hype rising to $50$-$70 at most then fall down to 15-$20,” said one Redditor.
“I seriously hope you have many millions and this was just to troll. Your assets will likely depreciate by 20k next week,” another user warned a Reddit stock buyer.
“Somebody name an IPO than didn’t 1/2 in 6 months,” noted another.
One user poked a little fun at WSB’s history of pumping up stocks, pleading with fellow Redditors, “Hey guys how about not shorting reddit but phaumpin it to $500 so we can all get Lambos and leave reddit?? Don’t mess this up for me . . . ”“Reddit deserves nothing more than to be pumped and dumped,” countered another.
One Redditor voiced the frustration of many users who weren’t allocated the number of shares they had requested, saying “BACK UP THE TRUCK BOYS! I’VE BEEN ALLOCATION A SHARE. YES, A SHARE. A SINGLE SHARE. ONE.”
One Reddit user who’s not complaining or snark posting? CEO Steve Huffman, whose 368,954 Class A shares boosted his net worth by more than $500 million.
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