Top stock market subreddits sceptic about Reddit stocks’ future

Reddit communities sceptic: Reddit's long-awaited initial public offering (IPO) made waves on Wall Street as the company's stock market value surged to nearly $9 billion on its first day of trading. However, amidst the excitement, users on Reddit's largest stock trading forums expressed scepticism about the future prospects of the company's shares.

Commenters on Reddit's "wallstreetbets" forum, known for its speculative nature, wasted no time in discussing potential strategies to profit from Reddit's IPO. Some users, like "savage011," sought information on purchasing put options, indicating a bearish sentiment towards Reddit's stock.

On the day of its debut, Steve Huffman, CEO of Reddit, while talking to CNBC, expressed his gratitude for the users who ‘built Reddit what Reddit is today.’ Commenting on the sentiments growing in ‘wallstreetbets,’ Huffman said, “I love wallstreetbets, I'm a user, I've seen their comments over the last couple of weeks so I just send them my regards."

“The best investors of Reddit are people who use Reddit. I want our users to be investors and I want our investors to be our users,” added Huffman. 

Debut performance

Despite concerns voiced by some users, Reddit's stock price soared 48 per cent during its debut session, closing at $50.44 per share. The performance reflects a growing investor appetite for IPOs, signalling a shift from the risk-averse sentiment induced by rising interest rates in recent years.

Reddit's IPO was notable for its inclusion of retail investors, with 8 per cent of shares reserved for users, moderators, certain board members, and associates of its employees and directors. By extending this opportunity to retail investors and partnering with online brokerages like Robinhood Markets and SoFi Technologies, Reddit aimed to diversify its investor base and enhance its appeal.

Lack of profitability

However, discussions among Reddit users have highlighted concerns about the company's lack of profitability since its inception in 2005. Some users, like "atdharris" on Reddit's "stocks" forum, opted out of participating in the IPO due to uncertainties surrounding Reddit's revenue-generating plans.

For investors interested in betting against Reddit's stock, Nasdaq announced plans to list options on Reddit starting Monday, providing an avenue for traders to take bearish positions. 

Reddit's meteoric rise to prominence during the "meme-stock" saga of 2021, fueled by retail investors on wallstreetbets, highlighted the platform's influence in the financial markets. With over 15 million subscribers on wallstreetbets alone, Reddit continues to play a major role in shaping market dynamics and investor sentiment.

(With Reuters inputs)