Reddit Inc‘s RDDT upcoming initial public offering (IPO), expected on March 21, has investors bracing themselves for what could be a turbulent ride in the stock market.
What Happened: The news that Reddit’s IPO is between four and five times oversubscribed has stirred both excitement and skepticism among market participants. For example, some Reddit users are drawing parallels to past IPOs like Rivian Automotive Inc RIVN and Beyond Meat Inc BYND.
Both companies underperformed after their respective IPOs.
Reddit is aiming for a $6.5 billion valuation — $10 billion less than the valuation it achieved for its last fundraising round in August 2021.
Related: Reddit’s IPO Buzz – ‘Bullish On RDDT’ Vs. ‘Immediate Short’
While some see the oversubscription as a bullish sign, others remain cautious, citing the prevailing negativity surrounding the IPO within Reddit communities.
Despite concerns, there’s speculation that the social media platform could experience a surge in its stock price, fueled by the frenzy of retail investors eager to participate in a high-profile IPO.
We looked at responses as Redditors discussed the oversubscription and offered their insights on it.
[Reuters] Reddit’s IPO as much as five times oversubscribed, sources say
Will Reddit Stock ‘Moon Right Away’?
One Redditor expressed confidence in Reddit’s potential, suggesting that the platform could defy expectations and soar in its market debut.
However, some Reddit users recall how both the Rivian and Beyond Meat IPOs initially saw astronomical valuations before facing subsequent downturns.
The sentiment among investors appears divided. While some are planning to capitalize on the IPO’s volatility through options trading, others are adopting a wait-and-see approach.
Interestingly, Reddit’s decision to offer shares to its users has been hailed as a strategic move, tapping into the platform’s dedicated user base.
Related: From Hating Reddit IPO To Shorting The Stock: A Polarizing Debate Emerges Among Redditors
Will You Be Purchasing Puts Too?
However, concerns linger regarding Reddit’s profitability and the potential impact of higher interest rates on its stock performance. Some investors are considering purchasing puts, anticipating a downturn in Reddit’s stock price post-IPO.
Reddit’s IPO is poised to make waves in the stock market. Whether it will be a success story or a cautionary tale remains to be seen. But one thing is for sure – investors are in for an eventful ride.
Read Next: Reddit’s IPO Buzz: ‘Bullish On RDDT’ Vs. ‘Immediate Short’
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