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After all as Reddit files will be publicThe company wrote in its S-1 filing He “meme stock“Schemes on r/WallStreetBets may pose risks to investors.
subreddit r/WallStreetBetsA community of retail traders with 15 million members, it has described itself as “like 4chan found Bloomberg Terminal”. It is most famous for coordinating short squeeze on GameStop stock in 2021, a rebel move that cost hedge funds billions of dollars. The stock was so volatile, jumping more than 600% in a matter of days, that trading had to be halted several times. Retail traders tried to replicate the GameStop saga by investing in other heavily shorted stocks like AMC and Bed, Bath & Beyond, thereby reinforcing this trading phenomenon.meme stock,” to mixed results.
In its S-1 filing, the company wrote: “Given Reddit’s broad awareness and brand recognition, including the popularity of r/wallstreetbets among retail investors and direct access to a widely available trading platform by retail investors, our The market price and trading volume of Class A common stock may experience extreme volatility for reasons unrelated to our underlying business or macroeconomic or industry fundamentals, which could result in the loss of all or part of your investment if you are unable to sell your shares. Part may have to be lost. or above the initial offering price.
For Redditors who treat retail investing as Internet trolling, Reddit’s IPO may be the ultimate meme. The company also wrote in its IPO filing that it would invite Reddit users and moderators to buy stock in its directed share program. This is a rare move that will allow community members to buy stocks at the same price as institutional investors upon IPO. Participants will be prioritized based on their karma, which is a way to measure community contribution on Reddit.
But another risk factor for investors is that Reddit “may not be able to achieve or maintain profitability in the future,” it writes in the S-1. Despite its prominence in Internet culture, Reddit has failed to turn a profit. In 2023, Reddit suffered a net loss of $90.8 million, increasing the company’s cumulative losses to $716.6 million.
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