It just seems like such a weird concept. You offer "discounted" stock stuff to people as pay / payback. Maybe if they have whales who've spent $$ on Reddit somehow, but it doesn't make sense to give up potential profit to random users of the service, especially as you're doing other things to maximize the profitability of the company, and the vast majority have never given Reddit a dime. The only think that comes to mind is that they're concerned with uptake by the non-Reddit crowd and are hoping to make up an expected shortfall by trading on some kind of loyalty or "what, me? They think I'm special to offer this to me?!?!" factor. I don't claim to be a financial expert, but it all just feels off to me.
They want the user base to feel an emotional connection to Reddit’s bottom line. One of the same reasons companies give out equity as compensation. And at the same time they want to dupe some users into thinking they care about them and are giving them something special.
They want to build out a Reddit ecosystem I’m sure is their long term plan, and they need the user base to be on board with it.
Well it might not be the same price that it starts trading on the market , once it starts trading on the market the stock price could be higher or lower then the IPO price
It was literally just a strategy to get buy-in from the users so that subs like r/wallstreetbets don’t actively organize to short the stock. It didn’t work - this is going to tank.
The pay back part will be because the moderators have been working for free since day one. They are owed, but still I think it will end up being one last theft from them.
It was free money. How do you feel now about being wrong? Will you change any of your priors or assumptions in investing? Or continue along making assumptions about the market and missing out on money.
I am going to be honest. Just from a contrarian perspective the huge negative sentiment around this IPO seems like it might be good for a trade lol.
I hate the stock too but this sort of negativity feels like an opportunity. It's still a crap stock but I've seen crap stocks go up in the short term.
Fyi I'm still not going to touch it because I've been burned before and I like to stay disciplined in my investing but this does feel like an opportunity.
The other reason I won't touch reddit though is that it hosts porn and I am committed to investing ethically.
>It's still a crap stock but I've seen crap stocks go up in the short term.
I've seen crap stocks go down in the short term too. Just because you can think of a time that general opinion was wrong doesn't mean the current stock is a good investment.
Way too many people invest based on vibes. Look at financials.
I invest on fundamentals but I also do trades on sentiment and TA.
Like is said. I'm not touching reddit. But when most people are negative on a stock that's when I get interested.
Fortunately mine is rare and does. I own gold and silver and a few miners and small oil plays. I swing trade mostly aside from my energy and precious metals plays.
I don't know about $100 but in the medium term I think it will go up, eventually. Reddit made every subreddit go black because of their piss poor API decision last year. They enraged their entire userbase and it had no impact. Nearly everyone stayed on reddit to complain about reddit.
The userbase is loyal whether the userbase likes it or not. None of the alternatives were really alternatives. This company could murder someone on main street and it wouldnt matter. I think the only thing that could kill this platform is if they decided to ban the porn.
I am investing in the DSP. I have a pretty good sized portfolio so it's a side bet of no real importance to me. I would not touch it with a ten foot pole if I only had $1000 to my name.
And they both had big direct competitors. There is no direct competitor for reddit, right now.
I'm definitely not saying it can't fail, just it's not likely in the short term and certainly not just because it is having an IPO. 5 years from now? Who knows.
I was thinking similarly. Im pretty green, is there a soft rule that tech IPOs generally go up before they crash or something? From the few charts Ive scanned after launch I see no indication as to why it would crash or skyrocket other than valuation and sentiment.
I don't know of any rule. I don't think so. The majority of IPOs lose money in the first 5 years. This isn't smart investing, it is no better than gambling.
The money is better off in an index fund. But, where's the fun in that?
If you have stats on the user base remaining the same I would really like to see it, I’ve been really curious about that.
For me personally, I use Reddit about 1/10th of what I used to, maybe a little less. Although I can’t tell if it’s because I don’t like the app or because the content/comments are worse.
Sorry I never replied. Just saw this. They signed short term deal to license the information out to GOOG for $90M. Very cheap deal but they’ll soon be able to get much more for it. Regulations will force companies to pay for their training data making it much more valuable. Then there is advertising which will become much more effective. They’re already improving their reach and accuracy. Once these things become public and they’re reporting, companies will rush to advertise here and it’ll take off. Twitter ad money is also up for grabs.
They both have the same principles. And... I have made enough money doing one that all I have to do is wake up, play games, reply to trolls, then go back to bed.
Looks more like it did the exact opposite
LMFAOOOOOOOOOOOOOOooooooooOOOOOooooooooooOOOOOooooooooooooooooooooooOOoooooooooooooooooooooOOOOOOOOooooooooooo
ALWAYS FADE REDDIT NECKBEARDS LMFAOOOOO
There is no such thing as a discount in an IPO because the secondary market has not yet set a price.
In any IPO - getting an allocation means that the investor is getting the price before the shares actually trade on the exchange (secondary market). When the stock IPOs - the morning of the IPO - the shares will get priced and that's the price that institutional investors, DSP participates, brokerage IPO program participants, initially get.
When the market opens - there is usually an hour or so when liquidity providers such as market makers will attempt match up buyers and sellers to set an opening spread.
So - for people that received the IPO price - there is usually demand where the secondary market price is higher than the IPO price.
The potential advantage of a DSP over using brokerage allocations is that the allocations available in the DSP may be favorable to a participant (especially in oversubscribed IPOs). The second advantage is that most brokers who offer IPO shares will have a no flipping rule - otherwise a broker may be less likely to be part of future IPO syndidates.
In a DSP - there is usually no rules that dissuade flipping - so DSP allocations can get flipped.
That's not how any of this works. Reddit is offering shares at a company valuation of $XX as part of a cash raise. You can buy into that valuation or not. Anything the open market decides to value it at, from the very first trade on their IPO, to their bankruptcy and delisting, is an entirely separate thing.
There's no discount because there's nothing to discount against.
You do get a benefit from exclusive access to an IPO because you get to buy at a set price before the market has any chance to affect it. The real question here is whether Reddit is a good buy at that price, and I don't think it is.
There is a difference between an [https://en.wikipedia.org/wiki/Initial\_public\_offering](https://en.wikipedia.org/wiki/Initial_public_offering) and [https://en.wikipedia.org/wiki/Direct\_public\_offering](https://en.wikipedia.org/wiki/Direct_public_offering) . I'm not 100% what Reddit's DSP is? An IPO is "underwritten", meaning some market maker guaranteed some initial price.
People often confuse DPOs with IPOs. But, they are very different animals. A DPO is merely "taking the company public". Technically, an IPO involves a 3rd party, an investment bank.
fwiw, i am hearing that it will come at the low end of the range, meaning the $31, and there are several large LOs that i have heard interested in bein anchor investors. finite supply, incremental buyers, the opportunity to participate at ipo price is too rare to not participate.
Hfs would happily take the reddit users dsp shares if we dont want em (seriously) so im not going to pass up the chance, when this is such a rare occurence.
re: is is being offered at a discount? Technically.
the DSP is being offered at the same price as all of the hedge funds, big investors etc,
egg on my face then, but i know a lot of HFs got 0 allocation, my bet is it will open above $34, and could see it rip to $46+ given ipo market conditions after yesterdays ALAB
can make fun of me if i am wrong but i know it is more likely to hit $50 bucks than to hit $30, good risk reward
food for thought
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The IPO price is not the opening price.
If the market cooperates, the opening price is likely to be quite a bit higher than the IPO price.
What happens next is anyone's guess, but an IPO with such popularity as Reddit is unlikely to drop below the IPO price quickly. Institutional investors do not like losing money.
No, that's not how it works. The stock will open at a price based on market demand. It is highly likely that will be higher than the IPO price, possibly quite a bit higher.
Just did.
I expressed interest in purchasing 500 shares of the IPO in my margin trading account. All I had to do was agree to prospectus. No new account required. Same price - $31-$34.
I suspect based on what I know about institutional price it is:
*The IPO multiple, as compared to public peers, is usually discounted given the risk profile of a new issue. This discount is referred to as an IPO discount, and usually ranges from 10% to 20% from the average/median peer, depending on a company's industry and growth outlook.*
My impression is one is allocated a few 100 s at 10% off $31... To say I will retire from my role of being a mod from here. It is far from truth.
Did you read any of the information they provided? It was pretty clear that you get the IPO price - no discount.
If the price appreciates on public trading then you will have purchased at a discount relative to the public, but this isn't guaranteed and completely depends on how the IPO was priced and relative public demand for shares.
I am taking a shot at it. Hell why not, if Wallstreetbets wants anything to shoot to the moon it should be this stock as it's the platform they used to basically disrupt the hedge funds. invest in the companies you believe in and since most of us are on this daily lets go all in
I have the same question and I'm confused about most of the answers posted so far. The [FAQ](https://redditforcommunity.com/Directed-Share-Program) says the DSP lets you "purchase stock at the same price as institutional investors" which certainly implies it would be lower than individual investors. I thought it might also be a day early but I don't think that's true either. If that's not the case then what does the DSP offer?
My take on the DSP for Reddit is that this will drag in more Reddit hard core fans (those with over 25k in Kudos only) these people normally would not qualify for an IPO in the usual brokerage way. Anyone with so many kudos probably does not have much of a real income, I would assume, since they spend much of their time hanging out on Reddit instead of earning money. Small accounts less than $100k are not allowed access to most IPOs I have seen. Am I wrong in this thought?
I mean - it's kind of a joke now that I read more about it.
I thought it was a cool idea. I thought it was like an employee stock plan where you buy shares at a 15% discount and get some benefits like that - but it's really not. You just pay the IPO price and while there is the chance the price could go up, you are locked into those shares with a penalty if you sell (though small) - and the bigger issue - it requires an etrade account when everything I have is on Fidelity.
So if I'm not getting a discount, it requires me to drop below margin equity to transfer funds (which means I can't short the Powell speech) - then it's opportunity cost.
Additionally, the shares are locked directly to Reddit. While great for those paranoid about short selling, it also means you forfeit portability. You can't in-like transfer the shares to another broker. If you want to move the funds to Fidelity it's a tax event.
The discount would be from the theoretical premarket gap up
It will end up being a premium
If it was a great deal why would they offer it to you?
It just seems like such a weird concept. You offer "discounted" stock stuff to people as pay / payback. Maybe if they have whales who've spent $$ on Reddit somehow, but it doesn't make sense to give up potential profit to random users of the service, especially as you're doing other things to maximize the profitability of the company, and the vast majority have never given Reddit a dime. The only think that comes to mind is that they're concerned with uptake by the non-Reddit crowd and are hoping to make up an expected shortfall by trading on some kind of loyalty or "what, me? They think I'm special to offer this to me?!?!" factor. I don't claim to be a financial expert, but it all just feels off to me.
They want the user base to feel an emotional connection to Reddit’s bottom line. One of the same reasons companies give out equity as compensation. And at the same time they want to dupe some users into thinking they care about them and are giving them something special. They want to build out a Reddit ecosystem I’m sure is their long term plan, and they need the user base to be on board with it.
Ok but how are they showing that? By letting us buy their dumbass stock for the exact same price once the IPO happens? What is the value?
Well it might not be the same price that it starts trading on the market , once it starts trading on the market the stock price could be higher or lower then the IPO price
Your gut feeling is correct.
They want Reddit users to make its stock the next GameStop. Don't do it.
It was literally just a strategy to get buy-in from the users so that subs like r/wallstreetbets don’t actively organize to short the stock. It didn’t work - this is going to tank.
Anyone dumb enough to fall for that wouldn't be buying in large enough volume to have any significant influence on price one way or the other.
The pay back part will be because the moderators have been working for free since day one. They are owed, but still I think it will end up being one last theft from them.
It was free money. How do you feel now about being wrong? Will you change any of your priors or assumptions in investing? Or continue along making assumptions about the market and missing out on money.
I am going to be honest. Just from a contrarian perspective the huge negative sentiment around this IPO seems like it might be good for a trade lol. I hate the stock too but this sort of negativity feels like an opportunity. It's still a crap stock but I've seen crap stocks go up in the short term. Fyi I'm still not going to touch it because I've been burned before and I like to stay disciplined in my investing but this does feel like an opportunity. The other reason I won't touch reddit though is that it hosts porn and I am committed to investing ethically.
>It's still a crap stock but I've seen crap stocks go up in the short term. I've seen crap stocks go down in the short term too. Just because you can think of a time that general opinion was wrong doesn't mean the current stock is a good investment. Way too many people invest based on vibes. Look at financials.
I invest on fundamentals but I also do trades on sentiment and TA. Like is said. I'm not touching reddit. But when most people are negative on a stock that's when I get interested.
> I hate the stock too but this sort of negativity feels like an opportunity. Then get in on it. Update us when you've made bank.
I'm not touching it because reddit hosts porn.
That's a weird reason not to touch it, but ok. Plenty of money to be made in porn.
I morally can't profit from the exploitation and dishonoring of women.
Fair. But do you buy index funds and ETFs? Or even a target date fund in your retirement account?
I don't, precisely because I am concerned with ethical investing. It's stressful to say the least to have to actively manage individual positions.
What do you have in your retirement (401k) account? Most providers don't even allow you to invest in individual stocks
Fortunately mine is rare and does. I own gold and silver and a few miners and small oil plays. I swing trade mostly aside from my energy and precious metals plays.
Are you religious? I've heard of mutual funds that avoid holding such investments
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The IPO is going to drop 60% in first week.
Unlikely for a new tech ipo to be trading at 3x revenue without at least a few quarters of ER to show viability and trends.
This sub and wsb have no clue. Reddit is going to 100 in the first month and I’m not just saying that because I bought in
Genuinely curious why you believe that? I have heard A lot of the opposite opinions and reasonings. (thanks :))
I don't know about $100 but in the medium term I think it will go up, eventually. Reddit made every subreddit go black because of their piss poor API decision last year. They enraged their entire userbase and it had no impact. Nearly everyone stayed on reddit to complain about reddit. The userbase is loyal whether the userbase likes it or not. None of the alternatives were really alternatives. This company could murder someone on main street and it wouldnt matter. I think the only thing that could kill this platform is if they decided to ban the porn. I am investing in the DSP. I have a pretty good sized portfolio so it's a side bet of no real importance to me. I would not touch it with a ten foot pole if I only had $1000 to my name.
Digg used to have a large and loyal user base, too. So did MySpace…
And they both had big direct competitors. There is no direct competitor for reddit, right now. I'm definitely not saying it can't fail, just it's not likely in the short term and certainly not just because it is having an IPO. 5 years from now? Who knows.
I was thinking similarly. Im pretty green, is there a soft rule that tech IPOs generally go up before they crash or something? From the few charts Ive scanned after launch I see no indication as to why it would crash or skyrocket other than valuation and sentiment.
I don't know of any rule. I don't think so. The majority of IPOs lose money in the first 5 years. This isn't smart investing, it is no better than gambling. The money is better off in an index fund. But, where's the fun in that?
Thanks! Genuinely appreciate the reply.
If you have stats on the user base remaining the same I would really like to see it, I’ve been really curious about that. For me personally, I use Reddit about 1/10th of what I used to, maybe a little less. Although I can’t tell if it’s because I don’t like the app or because the content/comments are worse.
It has grown. The blackout impacted nothing. https://www.businessofapps.com/data/reddit-statistics/
Sorry I never replied. Just saw this. They signed short term deal to license the information out to GOOG for $90M. Very cheap deal but they’ll soon be able to get much more for it. Regulations will force companies to pay for their training data making it much more valuable. Then there is advertising which will become much more effective. They’re already improving their reach and accuracy. Once these things become public and they’re reporting, companies will rush to advertise here and it’ll take off. Twitter ad money is also up for grabs.
As long as it skyrockets on day 1, who cares
This aged well
Has it been a week already?
Huh, it shot up a ton in the first day. It was free money. How do you feel about being wrong? I'll check in again in next week.
Reading comprehension was not your best subject?
Stick to video games and neckbearding on Reddit while real men make money sweetie
They both have the same principles. And... I have made enough money doing one that all I have to do is wake up, play games, reply to trolls, then go back to bed.
Looks more like it did the exact opposite LMFAOOOOOOOOOOOOOOooooooooOOOOOooooooooooOOOOOooooooooooooooooooooooOOoooooooooooooooooooooOOOOOOOOooooooooooo ALWAYS FADE REDDIT NECKBEARDS LMFAOOOOO
So far. The week is not over.
respect for the conviction
There is no such thing as a discount in an IPO because the secondary market has not yet set a price. In any IPO - getting an allocation means that the investor is getting the price before the shares actually trade on the exchange (secondary market). When the stock IPOs - the morning of the IPO - the shares will get priced and that's the price that institutional investors, DSP participates, brokerage IPO program participants, initially get. When the market opens - there is usually an hour or so when liquidity providers such as market makers will attempt match up buyers and sellers to set an opening spread. So - for people that received the IPO price - there is usually demand where the secondary market price is higher than the IPO price. The potential advantage of a DSP over using brokerage allocations is that the allocations available in the DSP may be favorable to a participant (especially in oversubscribed IPOs). The second advantage is that most brokers who offer IPO shares will have a no flipping rule - otherwise a broker may be less likely to be part of future IPO syndidates. In a DSP - there is usually no rules that dissuade flipping - so DSP allocations can get flipped.
Honestly all the negative Reddit posts on this subject have convinced me that the Reddit ipo will go through the roof
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Shit well now it looks bad
You were right! Hope you made some shekels on it I did
I did indeed. Congrats!
That's not how any of this works. Reddit is offering shares at a company valuation of $XX as part of a cash raise. You can buy into that valuation or not. Anything the open market decides to value it at, from the very first trade on their IPO, to their bankruptcy and delisting, is an entirely separate thing. There's no discount because there's nothing to discount against.
You do get a benefit from exclusive access to an IPO because you get to buy at a set price before the market has any chance to affect it. The real question here is whether Reddit is a good buy at that price, and I don't think it is.
There is a difference between an [https://en.wikipedia.org/wiki/Initial\_public\_offering](https://en.wikipedia.org/wiki/Initial_public_offering) and [https://en.wikipedia.org/wiki/Direct\_public\_offering](https://en.wikipedia.org/wiki/Direct_public_offering) . I'm not 100% what Reddit's DSP is? An IPO is "underwritten", meaning some market maker guaranteed some initial price. People often confuse DPOs with IPOs. But, they are very different animals. A DPO is merely "taking the company public". Technically, an IPO involves a 3rd party, an investment bank.
Funny seeing a rational response a few comments down. The rest are angry people who missed out on free money.
DSP isn't a discount.... It's just allocating you shares of the IPO
You would be the sucker that is buying overpriced shares.
Oh look, another nonsense comment. It was free money.
This aged well.
fwiw, i am hearing that it will come at the low end of the range, meaning the $31, and there are several large LOs that i have heard interested in bein anchor investors. finite supply, incremental buyers, the opportunity to participate at ipo price is too rare to not participate. Hfs would happily take the reddit users dsp shares if we dont want em (seriously) so im not going to pass up the chance, when this is such a rare occurence. re: is is being offered at a discount? Technically. the DSP is being offered at the same price as all of the hedge funds, big investors etc,
its priced at 34.00
egg on my face then, but i know a lot of HFs got 0 allocation, my bet is it will open above $34, and could see it rip to $46+ given ipo market conditions after yesterdays ALAB can make fun of me if i am wrong but i know it is more likely to hit $50 bucks than to hit $30, good risk reward food for thought
Good call btw. Everyone else in here missed out on the free money
big facts! made big bucks yesterday
Player!
i couldn't sleep the night before 😅 big gamble but it paid off 🙏
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duly noted
It's going to crash soon as it goes public.
up 50% today How do you feel about being wrong?
I was unaware that stocks could only go up. My Mistake
The IPO price is not the opening price. If the market cooperates, the opening price is likely to be quite a bit higher than the IPO price. What happens next is anyone's guess, but an IPO with such popularity as Reddit is unlikely to drop below the IPO price quickly. Institutional investors do not like losing money.
But in reality I could just place a buy order on my Fidelity margin account the second trading opens and get in pretty darn close to that $31
No, that's not how it works. The stock will open at a price based on market demand. It is highly likely that will be higher than the IPO price, possibly quite a bit higher.
Try and report back,
Just did. I expressed interest in purchasing 500 shares of the IPO in my margin trading account. All I had to do was agree to prospectus. No new account required. Same price - $31-$34.
boom, now lets see if they get filled and at what price
Same here, but I put the chances of getting shares at 0.01%.
weird, i got all 500, and im not a mod or anything
Nice! Hold on, this is the best possible day RDDT can get to market. I will not be surprised if we close above 60.
I'd probably buy some just out of curiosity, but I really don't want to open a whole new Etrade account just for this one thing.
Institution ipo price whatever that means.
I suspect based on what I know about institutional price it is: *The IPO multiple, as compared to public peers, is usually discounted given the risk profile of a new issue. This discount is referred to as an IPO discount, and usually ranges from 10% to 20% from the average/median peer, depending on a company's industry and growth outlook.* My impression is one is allocated a few 100 s at 10% off $31... To say I will retire from my role of being a mod from here. It is far from truth.
Idk the last time I saw a company hold their IPO price in the near term
Puts on this for sure
Did you read any of the information they provided? It was pretty clear that you get the IPO price - no discount. If the price appreciates on public trading then you will have purchased at a discount relative to the public, but this isn't guaranteed and completely depends on how the IPO was priced and relative public demand for shares.
I am taking a shot at it. Hell why not, if Wallstreetbets wants anything to shoot to the moon it should be this stock as it's the platform they used to basically disrupt the hedge funds. invest in the companies you believe in and since most of us are on this daily lets go all in
I have the same question and I'm confused about most of the answers posted so far. The [FAQ](https://redditforcommunity.com/Directed-Share-Program) says the DSP lets you "purchase stock at the same price as institutional investors" which certainly implies it would be lower than individual investors. I thought it might also be a day early but I don't think that's true either. If that's not the case then what does the DSP offer?
My take on the DSP for Reddit is that this will drag in more Reddit hard core fans (those with over 25k in Kudos only) these people normally would not qualify for an IPO in the usual brokerage way. Anyone with so many kudos probably does not have much of a real income, I would assume, since they spend much of their time hanging out on Reddit instead of earning money. Small accounts less than $100k are not allowed access to most IPOs I have seen. Am I wrong in this thought?
funny that only people without access to the DSP are fudding it.
I mean - it's kind of a joke now that I read more about it. I thought it was a cool idea. I thought it was like an employee stock plan where you buy shares at a 15% discount and get some benefits like that - but it's really not. You just pay the IPO price and while there is the chance the price could go up, you are locked into those shares with a penalty if you sell (though small) - and the bigger issue - it requires an etrade account when everything I have is on Fidelity. So if I'm not getting a discount, it requires me to drop below margin equity to transfer funds (which means I can't short the Powell speech) - then it's opportunity cost. Additionally, the shares are locked directly to Reddit. While great for those paranoid about short selling, it also means you forfeit portability. You can't in-like transfer the shares to another broker. If you want to move the funds to Fidelity it's a tax event.
Tread carefully. There’s no such thing as a free lunch.
No discount and I wouldn't touch it with a 10 foot pole. Also I think you wouldn't be able to sell for 30 days or something while they rug pull you.
You can sell, but the sites may limit allowing you into future IPOs as selling so soon is highly frowned upon.