As anticipation builds around the much-anticipated Reddit initial public offering (IPO), Redditors themselves have laid down three intriguing scenarios that could shape the future trajectory of the platform’s stock.
A Reddit post by u/Connect_Corner_5266 called out to others Reddit/ors to provide their views on whether the Reddit IPO is a meme or mistake per their judgment.
The Redditor laid out three routes that the IPO might take. These are:
Stock Turns Into A Meme Stock And Gets Pumped Up By A Subreddit
Another interesting route envisions Reddit’s own subreddits, such as WallStreetBets (WSB), playing a significant role in pumping up the stock. In a twist of irony, Redditors could turn the platform itself into a meme stock through decentralized market manipulation.
The power of the community to influence stock prices, as demonstrated by previous meme stocks, could manifest in Reddit’s IPO. This adds a layer of unpredictability to the traditional IPO narrative.
Share Price Collapse/Dump Post-Lockup Period
One potential route sees the price of Reddit’s shares collapsing post-lockup period. This would be driven by early investors cashing out at internal rates of return (IRRs) surpassing their predetermined thresholds.
Lockup periods, during which insiders are restricted from selling their shares, often see a surge in sell-offs once the restrictions are lifted. This scenario suggests that early investors may seize the opportunity to cash in on their investments, potentially leading to a temporary downturn in the stock price.
Aggressive Ad Targeting Leading To Regulatory Scrutiny
The third potential route introduces regulatory scrutiny into the equation.
This scenario suggests that aggressive ad targeting on Reddit could lead to market instability, prompting increased regulatory oversight. As the platform navigates the complexities of content filtering by moderators, scrutiny could intensify.
Consequently, content may either lean further toward the right (X) or evolve into self-enforcing echo chambers susceptible to foreign interference, particularly in the lead-up to the 2024 election.
These three distinct paths underscore the dynamic and unpredictable nature of Reddit’s IPO journey. While the first scenario…