Reddit Warns That r/WallStreetBets Could Wreak Havoc on Its Stock Price (gizmodo.com) 28
An anonymous reader shares a report: Beware the apes, Reddit told the world in its IPO documents, though not in such explicit terms. 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. Reddit listed r/WallStreetBets as one of the possible risks to investing in the company in its S-1 form on Thursday, referencing the subreddit's role in the meme stock craze of 2021, where retail investors banded together to raise the price of struggling companies like GameStop and AMC. The goal of r/WallStreetBets back then was to screw over professional investors on Wall Street and make them lose money for betting against certain companies.
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. Reddit writes: "Given the broad awareness and brand recognition of Reddit, including as a result of the popularity of r/ wallstreetbets among retail investors, and the direct access by retail investors to broadly available trading platforms, the market price and trading volume of our Class A common stock could experience extreme volatility for reasons unrelated to our underlying business or macroeconomic or industry fundamentals."
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.
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. Reddit writes: "Given the broad awareness and brand recognition of Reddit, including as a result of the popularity of r/ wallstreetbets among retail investors, and the direct access by retail investors to broadly available trading platforms, the market price and trading volume of our Class A common stock could experience extreme volatility for reasons unrelated to our underlying business or macroeconomic or industry fundamentals."
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.
pump and dump (Score:2)
Planned and executed. Just wait 6 months for the first signs.
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I'm 100% on board with pumping and dumping Reddit. I just need to know when to get out.
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> I just need to know when to get out.
Watch officer sales reports every day?
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I assume they funnel it through multiple intermediaries, so that when normies like me realize what's going on we'll be left holding the bag. I suppose trading volume could indicate it.
Re:pump and dump (Score:4, Informative)
When you buy, backstop your purchase with a stop loss order. Update it daily as you accumulate gains.
You'll be fine.
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I could buy into their early offering, as my account is in the top 75k apparently
Oh no... (Score:5, Informative)
...the peasants are revolting!
Trading in stocks should be a privilege reserved for the elite. They are the only ones that can be entrusted with high-frequency trading that massively affects share prices for no reason that relates to the performance of the companies involved.
If regular people start doing the same on a tiny scale, surely it would mean the end of civilization as we know it!
Re:Oh no... (Score:5, Insightful)
It's only bad when you're not the one benefiting from it. Stocks aren't volatile when Wall Street manipulates price, it's only volatile when they fail to.
Re:Oh no... (Score:4, Informative)
It's only bad when you're not the one benefiting from it. Stocks aren't volatile when Wall Street manipulates price, it's only volatile when they fail to.
In fact the famous manipulation that r/wallstreetbets was accused of implementing was simply buying a stock and holding it, at least in the case of GME. It was hilarious to hear all the whining of a short squeeze [wikipedia.org] as if simply buying a stock and holding it breaks the market. The stock market was badly broken to begin with and in this case it was the little krill that were feeding on whale guts torn open by incompetence instead of millions of krill going to pad the blubber on unstoppable juggernauts of greed.
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> it would mean the end of civilization as we know it
I hope so.
The Gini coefficient is too damn high. Electricity too.
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...the peasants are revolting!
“Revolting,” said the king, “they’re disgusting.”
"You said it! They stink on ice!"
No, that's not their problem (Score:2)
Their problem is they have no serious path to long term profitability.
Whatever the minions of chaos do along the way is a side show on the way down to zero. Or being bought by BzX which is very similar.
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Their problem is they have no serious path to long term profitability.
That is the right answer. Reddit cannot rely on growth anymore, not at this point. And it's certainly not profitable in its current form. Warning about a bunch of "troublemakers" messing with the price is ignoring the giant iceberg ahead.
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One day someone will figure out how to make money with a giant forum full of anonymous users and boy oh boy your great grandchildren will wish you bought a piece of reddit.
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Money well spent if you want to make an LLM that simulates lying humans and other LLMs.
Was that the goal? (Score:5, Insightful)
Nice framing them as a bunch of troublemakers "sticking it to the man" instead of as people just playing the market opportunistically like everyone else. The pros are just mad that it worked.
Re:Was that the goal? (Score:5, Insightful)
Yep. Lots of gatekeepers in the world trying to protect their advantage that has nothing to do with skill or effort.
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The pros are just mad that it worked.
Did it really though? GME, the darling of WallStreetBets has been trending back down towards fair market value [yahoo.com] as of late. This is what happens after a short squeeze. There were squeezes before reddit. The MOASS (Mother of all short squeezes) they were predicting has not come to pass. There has not been a huge crush of hedge funds scrambling to find registered shares.
I'm not saying I'm a fan of naked call selling either. I'm sure *some* of the big boys doing that
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The goal of WSB isn't to "save" a company from the locusts. The goal is to act as an exterminator for the pests, or at least as some kind of pest control.
blame shifting (Score:3)
LOL (Score:3)
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Totally. Spez was unprofessional enough to edit random people’s posts and they have gotten rid of troublesome subs in the past.
As the CEO of a publicly traded company he’d steamroll any sub that messed with share price.
/r/LeopardsAteMyFace (Score:2)