After Reddit’s market value soared to nearly $9 billion in its debut on Wall Street on Thursday, commentators on the social network’s largest stock forums expressed skepticism about the company’s prospects.
“Where can I buy puts?” asked user savage011, among the most popular comments on Reddit’s “wallstreetbets” forum, after the company and its underwriters priced its IPO at the top of its indicative range, which rose from $31 to $34 a share on Wednesday , raising $748 million.
Buying the put option gives traders the right to sell the stock at a fixed price, earning money if the market price of the stock falls.
Reddit shares rose 48% in the early session on Wall Street, closing at $50.44 each.
Its stellar debut – more than two years in the making – is the latest sign of improving investor appetite for IPOs, after a rise in interest rates in 2022 brought with it risk aversion.
Unusually, Reddit reserved 8% of the offering’s shares for its site’s users and moderators, some board members, and friends and family of its employees and directors.
But recent comments on Reddit about the IPO have focused heavily on the site’s lack of profitability since its 2005 launch.
“I ended up not participating in the IPO. I don’t know enough about the company’s plans to actually make money by investing in it,” commented user atdharris on Reddit’s “stocks” forum, which has 6.6 million users .
Investors looking to bet against Reddit stock will have the opportunity early next week. Nasdaq plans to list options on Reddit starting Monday. Other options exchanges will likely list the contracts on Reddit at the same time or shortly thereafter.
Source: Terra
Ashley is a professional author and journalist, working at 247 News Update. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. She brings a unique perspective and in-depth analysis to her work.
