Reddit shares will be priced between $31 and $34; Redditors can sell immediately

We don't yet know the exact price of Reddit shares when they go on sale, but the company has already indicated that the initial public offering price ( IPO) will be between $31 and $34 per share.

Selected Reddit users will receive priority access ahead of the IPO and, unlike most preferential access deals, they will be able to freely sell their shares. will share immediately if they want …

Reddit IPO

Reddit's long-awaited IPO became official last month after two controversial decisions apparently aimed at maximizing revenue and attracting investors.

Most infamously, Reddit began charging fees. large fees for using the API, which led to the closure of the extremely popular third-party app Apollo. This led to large-scale protests, which the company had to forcefully stop.

Most recently, Reddit announced a controversial deal to sell access to user-generated content to a then-unnamed artificial intelligence company later revealed to be Google.

Reddit Stock

Updated data from the Securities and Exchange Commission (SEC) shows shares will be priced somewhere in the range of $31 to $34.

Company and its investors plan to sell about 22 million shares. The company itself is selling 15 million shares to raise up to $519 million.

Reddit users can sell immediately

Approximately 1.76 million shares have been reserved for direct share distribution programs. This reserves shares for moderators and Reddit users to buy before the IPO date.

Typically, such preferential access is reserved for large investors, and there is usually a lock-in period. during which shares cannot be sold. This is intended to stabilize the share price for at least the first few months.

However, in this case, the documentation says there will be no lock-up period, meaning Reddit users can sell their shares as as soon as they want – even on the day of the IPO.

It often happens that an IPO is oversubscribed, which means that investors want to buy more shares than are available. They will then buy these shares on the stock exchange as soon as trading opens, and early investors can make immediate profits.

In this case, it is impossible to be sure that this will happen. , but it's certainly a good option – even if some Reddit users aren't impressed by the proposal.

But investing can be risky

Any stock purchase is a gamble, given that stock prices can go down as well as up.

The r/WallStreetBets subreddit is particularly risky here . Participants caused chaos when they began investing heavily in GameStop to drive up the stock price. This was done in order to profit from professional investors who had shorted the company and were then forced to buy shares at an inflated price to strengthen their position.

The fear here is exactly the opposite: participants might take advantage of going short on shares. to reduce the price below the IPO price.

Photo Anna Nygard on Unsplash

Leave a Reply

Your email address will not be published. Required fields are marked *