In its IPO documents, Reddit said the price and volume of its stock could “experience extreme volatility for reasons unrelated to our underlying business.”
Put simply, the company warned potential investors that one of its subreddits, the infamous r/WallStreetBets, could make its stock price and volume extremely volatile—and there’s little Reddit can do about it.
It’s entirely possible that the everyday people on r/WallStreetBets, a subreddit of 15 million retail investors who refer to themselves as “apes” and “degenerates,” and other online forums could do the same thing with Reddit’s stock, the company stated.
The volatility could cause people to lose all or part of their investment, the company explained, if they are unable to sell their shares at or above the IPO price.
The long-term effect of movements like those propelled by r/WallStreetBets is already documented, with the takeaway being that surges of interest and heavy investment don’t necessarily bring success to companies over time.
Furthermore, shares purchased by users and moderators will not be subject to a lockup, the period after an IPO where insiders and early investors are banned from selling their stock to prevent the price from going down.
The top post on the subreddit on Friday morning—“Reddit lists WSB as a risk factor for its IPO 😏”—had thousands of comments as of the publication of this article.
The original article contains 542 words, the summary contains 198 words. Saved 63%. I’m a bot and I’m open source!
This is the best summary I could come up with:
Put simply, the company warned potential investors that one of its subreddits, the infamous r/WallStreetBets, could make its stock price and volume extremely volatile—and there’s little Reddit can do about it.
It’s entirely possible that the everyday people on r/WallStreetBets, a subreddit of 15 million retail investors who refer to themselves as “apes” and “degenerates,” and other online forums could do the same thing with Reddit’s stock, the company stated.
The volatility could cause people to lose all or part of their investment, the company explained, if they are unable to sell their shares at or above the IPO price.
The long-term effect of movements like those propelled by r/WallStreetBets is already documented, with the takeaway being that surges of interest and heavy investment don’t necessarily bring success to companies over time.
Furthermore, shares purchased by users and moderators will not be subject to a lockup, the period after an IPO where insiders and early investors are banned from selling their stock to prevent the price from going down.
The top post on the subreddit on Friday morning—“Reddit lists WSB as a risk factor for its IPO 😏”—had thousands of comments as of the publication of this article.
The original article contains 542 words, the summary contains 198 words. Saved 63%. I’m a bot and I’m open source!