RDDT: Reddit IPO Drops Thursday at $6.4 Billion Valuation. Army of Short Sellers Lurks.

Many users on the WallStreetBets forum see Reddit’s move to list on public markets as a chance to make a buck by going YOLO but in reverse—short the stock.

Key Points:

• Reddit floats 22M shares Thursday.
• WallStreetBets vows to take action.
• Company warns of looming volatility.
• The upcoming IPO of Reddit RDDT is causing a buzz in one of the social media platform’s most popular forums, WallStreetBets. The chat group is home to swashbuckling traders, capable of shooting a stock to the moon—GameStop GME—but also powerful enough to bring down a hedge fund overseeing billions of dollars. This week, WallStreetBets may have a new target—Reddit itself.
• Reddit is going public in New York on Thursday, March 21. With a valuation of $6.4 billion, the stock is expected to float 22 million shares at a price range of $31 to $34 a piece. Over its 18-year history, it has never turned in a full year of profits. Moreover, the birthplace of “meme stocks” wrapped last year with $804 million in sales and a net loss of $91 million. And these figures are pissing off the notorious trading forum.
• WallStreetBets boasts about 15 million users and a number of recent posts in the subreddit scrutinize the company for its audacious decision to list despite never turning a profit. These slamming posts, calling for a short-selling attack on Reddit’s shares, received thousands of so-called upvotes.
• Among the reasons for flipping the script were Reddit’s lack of a profitable year. Also, unlike Netflix NFLX and Spotify SPOT, Reddit doesn’t pay for its content. Volunteer moderators keep things moving for free. On top of this, the CEO was awarded a pay package of $193 million last year. Against all that, Reddit has warned in its prospectus—the file required for listing—that WallStreetBets could cause “extreme volatility” in the stock price.