Reddit was listed on the New York Stock Exchange on Thursday and closed at $50.31, much to the delight of investors who got into the IPO. Now, they’re figuring out what to do next.
Ahead of public trading, Reddit reserved 8% of its stock at $34 per share for moderators, eligible users, and members of their board. The early investment opportunity has allowed some users to already turn a small profit.
“...Aaaaaand I'm out. Bird in the hand, I'm happy,” posted u/LearnedButt to r/RedditIPO on Thursday.
“20K up. I’m out at 54 and happy. Even if it goes to 100/share, I'm cool and feel not an ounce of FOMO. This is 20K I didn't have an hour ago. Best of luck to y'all.”
“For those who sold, what are you doing with your profits?” asked u/Timely_Shock_5333 in another thread on the subreddit.
“Bought a Costco hot dog 🌭,” joked u/morbob.
“I made around $1600,” posted Cosmic_Gumbo. “Hoping to snowball that into the truck fund. My goal is to buy in cash, I’m halfway there.”
“Paying off high interest credit card debt! Woo!” posted u/bellbros.
Users also discussed plans to buy cars, save some of the money for taxes, and reinvest their earnings into retirement accounts. But not everybody was ready to take the quick, easy win.
“Bought and will hold,” posted u/JimmyMeatJames in another thread on Saturday.
“I bought the stock and am going to hold. People buying and selling the stock is going to increase volatility. Reddit being such a well known entity might be a double edged sword but, I’m willing to wait and see if they can make use of the capital and how they are going to do it.”
“I missed both the Facebook and Google IPO's because I was pissy about having to pay a premium over the institutional price and would definitely be rich now off either one. I'm not making that mistake again,” posted u/No-Conclusion8653. “Facebook IPO price $38. Today $507.76.”
“Holding too,” added u/OptimisticP. “There is long term growth potential with this stock from the use of data to train AI. Also, I've been a Reddit user for nearly 7 years and I spend the majority of my spare time on this platform than any other social media platform. The content I'm interested in and follow has tremendous value. If I have a question, this is the place I come.”
And while there was plenty of enthusiasm for betting on the company, other Redditors weren’t so sure.
“Just a reminder,” posted u/GreyhoundsAreFast, “you are here,” pointing to a speculative graph predicting that the stock might spike up quickly after the IPO before dropping off precipitously.
“Facebook IPO price $38. Today $507.76,” posted u/No-Conclusion8653 as a rebuttal.
“I keep hearing this,” replied ZeroSumGame007 skeptically. “Which…yes I guess. But the odds Reddit turns into one of the most successful companies of all time is likely not high.”
An SEC filing by Reddit ahead of the stock going public listed some of the risk factors investors in the company, which has never turned a profit in 20 years, should look out for. Along with worries about the existing Reddit user base losing trust in the reliability of the platform, an inability to convert visitors from search traffic into registered users, and userbase frustration with likely increased advertising, Reddit also cautioned over “disruptions to the normal operation of our communities” by “actions or inactions by our volunteer moderators.”
Reddit moderators and users previously shutdown large subreddits representing millions of users last summer in protest against policies cutting off API access to third party developers.
But not all users were combing through SEC filings or plotting out sophisticated strategies of what to do with their profit.
“So next logical question? Now that I sold, what is the capital gains tax[?]” asked TypoRegerts.
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