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Reddit cites r/WallStreetBets as a risk factor in its IPO filing
As Reddit finally files to go public, the company wrote in its S-1 filing that "meme stock" schemes on r/WallStreetBets could pose a risk to investors.
The subreddit r/WallStreetBets, a community of retail traders with 15 million members, describes itself as being “like 4chan found a Bloomberg Terminal.” It’s most well known for coordinating a short squeeze on GameStop stock in 2021, a rebellious move that cost hedge funds billions of dollars. In its S-1 filing, the company wrote: “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, which could cause you to lose all or part of your investment if you are unable to sell your shares at or above the initial offering price.” The company also wrote in its IPO filing that it will invite Reddit users and moderators to buy stock in its directed share program.
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