Reddit users who took advantage of their privileged pre-IPO stock access saw Reddit's share price soar from $34 to $59.80 thanks to yesterday's close up 86%.
Update: Subsequent stock sales by the company's CEO and COO coupled with a report describing the stock as “severely overvalued.” 8221; – the price fell to $49.32, which is below the closing price on the day of the IPO …
CNBC reports on the latest events:
Reddit shares began a downward spiral on Wednesday when they fell about 11% to $57.75 at market close. That day, Hedgeye Risk Management called Reddit shares “severely overvalued” in a report cited by Bloomberg News, adding that the company was “short benched” by the firm.
Earlier this week, Reddit said in a corporate filing that it reported that CEO Steve Huffman sold 500,000 shares. Ben Silverman, vice president of research at Verity, told CNBC that the move was expected and represented only “a portion of its holdings.”
Reddit Chief Operating Officer Jennifer Wong, meanwhile, said she had sold 514,000 shares and now owns 1.4 million shares of the company.
While an IPO does provide existing shareholders with the opportunity to convert some of their paper wealth into cash and is not a completely unexpected event, the scale of the sales has led some to question the actions of company leaders. faith in the company.
The original story is as follows:
Early private investors made even bigger profits, and OpenAI CEO Sam Altman saw his stake in the company. the company will grow from $200 million to more than $600 million – and some analysts believe the market's confidence in the stock could be good news for the tech sector as a whole …
Prolific redditors got early access
Prolific redditors got preferential access to shares and the ability to buy shares pre-IPO through a private equity program. This type of access is usually reserved for large investors.
Not everyone was impressed by the offer, and some felt it was risky to invest in a company that had made losses every year since its launch.
Not everyone was impressed by the offer. impressed.
p>
Of particular concern was the reaction of members of the r/WallStreetBets subreddit. 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's shares and were then forced to buy shares at an inflated price to improve their position. This time they were afraid they might do the opposite: sell shares to lower the price.
Reddit's stock price rose 86%
With a starting price of $34, due to strong demand, shares jumped 48% on the first day of trading. Yesterday the price continued to rise, reaching $59.80 by the close of trading.
Reuters reports that most investors believe the trend will continue, with strong demand for bullish options – that is, bets on a stock price rising further.
Reuters reports that most investors believe the trend will continue . p>
“The action happens on the call side and gathers around the top side,” said Ophir Gottlieb, chief executive of Capital Market Laboratories in Los Angeles. “Since the stock traded higher on the first day, this appears to be speculating on higher moves.”
Could be a signal of good news for other tech startups
CNBC says some analysts believe this is good news for the prospects of other tech startups looking to to leave publicly, including Plexo Capital managing partner Lo Tony.
Tony told CNBC that Reddit's debut was “a positive sign not only for Reddit, but, I think, as well as the tech industry and what this could mean for future IPOs.”
“One thing we know for sure: During the Reddit roadshow [there was] a lot of investor appetite, and we see that it continues to hold up well,” Tony said. “Clearly the market is signaling that more companies are willing to go public.”
He warned that we will need to see the results of further IPOs. to be sure, and that some well-funded startups may be content to remain private for now.
Image: 9to5Mac
