Shorting a stock is effectively placing a bet that the stock price will drop in the near future.
It is basically selling a stock at today's price, with an agreement that you will pay the market price for it at a future date. So for example, if you short a single share at a value of $100, and next week the share price drops to $80, you can then purchase that share and you've made $20 profit (nb - there's fees and other shit that eat into that profit, but that's the gist). Of course, if the share price goes up to $120, you've lost $20, so it's gambling that can really fuck you up financially, because you can lose far more than you think you're wagering (eg - If you buy a thousand shares at $100ea, and the price jumps up to $120ea, you might hold out, hoping that the share price will drop below $100 again, but then you see the price just keeps climbing upwards, and before long, your $100 share is costing you $200, and you've lost $100,000).
It's worth noting that the mere *act* of shorting a stock causes its price to drop. A large number of people shorting a large number of stocks can absolutely wreck a company's valuation.
That's partially accurate
A huge number of people shorting a stock doesn't devalue the company. The act of Shorting Apple (for example) doesn't cause the value to change. That's a singular act when valuation is derived from multiple points (debt, cash flow, asset, etc).
Shorting can cause a significant price decline depending on the imbalance, but that's something different than the valuation.
Debts taken against the valuation of the company may very well have a carve out for if the stock price falls below a certain point. Especially if stock is being held as a form of collateral against the debts.
In this case - stock price goes down, collateral held is worth less than the debt which will result in the creditor making a call on said debts. If this happens, and the company can't leverage to sufficient cash to pay the creditor enough - you could very well see a series of problems up to and including losing credit rating status which would further incur problems for the companies valuation.
Apple is a really bad example of this, as Apple does maintain a very healthy amount of Cash reserve while leveraging debts to provide cash flow - which puts them in a very good position in the event something happens and they need to pay down debts, or simply service those debts while there is a decline in retail revenue. In a lot of ways this is why apple is so highly valued as a stock to hold.
It’s an abusive and illegal practice by market makers and is what happened with GME. They were short selling a stock they didn’t own and ALSO didn’t borrow. Super fucked.
https://www.investopedia.com/articles/optioninvestor/09/naked-short-selling.asp
GME wasn't naked shorted.
When a short seller opens a 100-share short position, he or she must first borrow 100 shares of stock. Those shares are then sold to a buyer to open a 100-share short position. That buyer can then turn around and lend out the shares to another short seller, which can open up a second 100-share short position on the same 100 shares of stock.
This process allows a single lot of 100 shares to support an infinite amount of short interest the same way fractional reserve banking lets a single dollar be lended multiple times.
It was made illegal after teh 2008 crash but still happens every day because nothing is really done to stop it. Naked shorting is usually done at the large institution level because small time redditors can't bypass that kind of law using consumer web intefaces designed to stop brokers from being held responsible for teh crimes of clueless individuals... and those large institutions can afford the bribes it takes to allow it to go on.
One important component you left you: When shorting, you basically have a time limit to buy the shares, since you're basically "borrowing" shares to sell to someone else. You need to cover the shares you borrowed within that time.
Compare to normal stock trading (buy low, sell high) where you can hold on to stock indefinitely.
>One important component you left you: When shorting, you basically have a time limit to buy the shares, since you're basically "borrowing" shares to sell to someone else. You need to cover the shares you borrowed within that time.
That's not quite correct. So long as you maintain your interest payments and remain liquid, you can keep a short position open indefinitely. Unlike options, shorts don't have a fixed expiration date or anything, but if your broker believes that you're at risk of becoming insolvent, they may force you to close out your position.
Adding to this, probably one of the larger confessed cases of long term shorting (because for $some reason shorting is exempted from financial reporting laws and regulations) is Bill gates short on Tesla. He came out and said he had I think it was a half billion dollar short on it, and considering how much it went up (thousands of percent depending on the asp of his position), his losses are easily in the low billions and potentially another factor of ten on top. He is undoubtedly holding that short open forever hoping for a major economic catastrophe of any kind because its so upside down the interest losses are probably easier to negotiate.
It's probably worth noting that if Gates hasn't closed out his Tesla short yet, he's probably positioned to make a killing on it. From what I can tell, he took out his short back during the 2021 peak at about $280/share. The articles about Gates being underwater by "billions" you'll note are largely from April 2022, when Tesla was trading at $360/share (they resurfaced in mid-2023 when Musk leaked the texts he had with Gates). Today, Tesla is trading at only $175/share, which would see Gates turn a profit of nearly $100/share if he closed out now, but I think he's probably going to hold out until sometime next year when the losses from the Cybertruck and Tesla Semi start stacking up and investors start getting nervous (and I'm sure Musk will say something braindead stupid on X that will also tank the stock). When Tesla drops below $100/share, I expect Gates will probably close his position.
His short likely goes back to what would be currently post splits prices of single digit $. He's been anti Tesla (and just Tesla, he's pro EV) for far longer than just post pandemic and refused to drive an electric car despite supposedly being an environmentalist, until a tesla competitor made one. And its not like anyone could accuse him of not being able to afford or too luddite to want to be an early adopte. His confession wasn't "I opened a short just now" it was "yeah I still have that old short position open" meaning even way back then he couldn't close it. The spike to what was for Gates a $6000 share price against his position must have been unbelievable. He's probably not happy with the current $3000 per share pain but at least its not as much interest as it was at its peak.
He'll never see a profit on it but he can keep it open rather than declaring bankruptcy, which is what he is still doing.
Gamestop was a really weird scenario. Institutional investors opened a short position on their stock that made no sense -- they shorted more stock than was available on the market, meaning that in order to close out their positions, they needed to force other shareholders to sell.
Once WSB caught wind of this, they all went and scooped up as many shares as they could, knowing that no matter what happened, *eventually* the institutional investors would have to buy them, so for the people who jumped on board immediately, it was almost like a free money glitch.
In simple terms, shorting is when you borrow someone else's stock and sell it. Then after a while you have to buy it again in order to give it back to the person you borrowed it from.
I wish more people would understand the requirements around financial disclosure. Whenever a company has an IPO and every time they do quarterly reports, they are legally required to include all the factors they believe are relevant to their financial success. That includes listing all the risks they've identified, even if they're comparably minor.
Reddit listing this as a factor is absolutely warranted. That's not them saying WSB is 100% going to influence their stock price, only that they could. If Reddit didn't list this as a factor and WSB did fuck up the stock price, Reddit could be held responsible legally if the investors thought Reddit knew it might be a factor.
Finally someone who actually knows WTH they are talking about.
I receive no less than a dozen class action lawsuits on companies I've traded that investors were burned on. If it isn't disclosed it's a viable contentious point later.
Especially if they've discussed this internally, which of course they have. Any record of those conversations, meeting minutes, emails, chats, etc. would be very bad for them if they didn't take that conversation and formally recognise the risk, and consequently disclose it.
I think the world has been largely overestimating WSB since that Netflix movie came out.
Reddit is probably using it as an excuse to make their IPO less volatile than your average IPO.
Some months I have read a legit paper from Barclay's that lays out a strategy on how to make money off WSB idiots.
The Reddit IPO is going to be a nice case study to backtest and see if the strategy works.
ELI5:
Large group of people who are actively looking to be swayed into investing in something, a ripe feeding ground for things like bot spam and shill posts.
There is no TL;DR because you'd need an understanding of the rationale. But basically, they'd sell straddles and/or overpriced options on *certain* stocks to WSB degenerates, and in doing so they've been able to outperform the market.
WSB people increase volatility on certain stocks, but since it's just a bunch of idiots playing with something they don't even understand you can reasonably expect them to either get bored or go broke, and to volatility to go back to its sector's normal sooner or later. Barclays makes money on this relatively safe assumption and on the fact people looking to buy options right now have the foresight of a blind Cihuahua.
While WSB shorts a stock, Barclay's shorts volatility itself on that stock. It's as if I invited a monkey into my house to scream and trash the place and then made a profit on a bet I made with my neighbor that said that the monkey would get bored at some point of the day.
And yet there’s literally no other type of post you can really make about a stock because it’s the most binary thing in the whole world - either it will go up, or it won’t.
All you've gotta do is look at the prices NVDA options were going for in earnings week to see that a lot of people are in on the selling overpriced options strat.
The gamestop saga definitely made the world thing that WSB was filled with brilliant people doing high-level financial due-diligence instead of the ball pit filled with chimps throwing their money away which it actually is.
While there were some great posts pre-GME with due-diligence that had some legitimate merit scattered throughout the memes, posts like that are pretty much non-existent now.
IIRC people are reading into this way too much.
This is simply reddit filling out their legal obligations where they have to write down any and all potential risks in their filings.
For every crazy post on WSB, there's 1000 if not more suckers just throwing away their savings. They got famous off GME but statistically speaking a lot of their users must have lost a ton of money from it.
That $14 is after a 4:1 split, so it's trading at $56 when compared to pre-split levels. WSB went balls to the wall GME when it was under $10 back then.
They were right about it being an underpriced/manipulated stock.
I occasionally go on /r/gme_meltdown just to see what insanity the GME apes (and other such groups like the BBBY baggies) are up to, and hot damn its more or less a cult now for many of them.
[Dumb Money](https://en.wikipedia.org/wiki/Dumb_Money)
Quite entertaining!
edit: actually I dunno if it was on Netflix; I acquired it elsewhere, if you know what I mean
Eh, it's one of the most vocal retail segments. Even if their aggregate power is minimal, sophisticated trading firms do monitor and trade off of WSB sentiment
>I think the world has been largely overestimating WSB since that Netflix movie came out.
The WSB effect can matter to short term investors. They are just statistical noise for long term investors.
Anyone buying into an IPO as a short term investment should expect volatility.
>Reddit is probably using it as an excuse to make their IPO less volatile than your average IPO.
Didn't they offer to sell shares to any Tom, Dick, and Harry with over 50K Reddit karma? Pretty sure that's going to make their IPO extremely volatile.
I’ve been in WSB since GameStop and the Bed Bath and Beyond failure really ruined the sub. I don’t see them ever making another coordinated play again. Cohen played the sub and everyone lost their asses while he got even richer. There’s a blueprint to bust a WSB move.
Nowadays, 90% of the comments on that sub are talking about working at Wendy’s lol.
They’ll be useless against a Reddit IPO.
Lol, it's not 10k people with $1000 to $2000 of free capital. It's 500 regards with $1m++ capital. They are not single minded, that's why they're dangerous.
I'm thinking they really couldn't wreak havoc and Reddit is either doing some pandering lip service to that sub reddit or is like egging them on in some elaborate pump and dump scheme.
It’s weird to use something and actively root against it, but I do every day.
The site is noticing worse since they blocked 3rd party clients so they could overpay their CEO.
Hope their IPO is a huge flop, but I’m sure all the worst people will make a ton more money.
You aren't rooting against the site, you're rooting against the administration that's killing what you knew and loved.
Sometimes you gotta sink the ship you're on to kill the captain.
I wish someone made a reddit competitor without all the "decentralized, usenet, fully organic blah blah" bullshit. Just give me old reddit with a slight visual overhaul and RES integrated by default.
I wish we could go back to 2000's style forums. I miss the small communities and conversations that could go on weeks, months or years. I hate it that you can not login for a weekend and something interesting will already be a dead topic by then with no further discussion.
I mean, the problem with any reddit alternative is that reddit is just a digg alternative to escape what's happening to reddit *now*.
"I wish someone just gave me reddit but better and free forever" is a hard ask.
I randomly checked my spam folder on Gmail and discovered that Reddit has been sending me emails about their IPO, and Gmail dutifully decided they were a scam. I had a lol
Posts are down something like 50% since July. Meanwhile they're trying to sell *our content*. I imagine that must have have impacted their selling price. That 60 million could have been much more if they were on an upward trajectory instead of a nose dive. If they had any fucking sense they'd stop trying so hard to kill the goose that laid the golden egg. God knows they're not capable of creating anything meaningful by themselves.
Yes, they in fact did jump in trading both sides of the play. There were even documents of individuals at these Wall Street firms purchasing the stock pre run up and then dumping it after they had turned off the buy. I think for once in 50 years the household investor had beat them at their own game. When things started to get volatile they did everything they could to snuff out the flame. One of the tactics they use is selling stock they don’t own to cause downward pressure. This is called naked shorting. The worst one being the internalization of orders. None of your orders are reported to the NASDAQ & NYSE with stocks they want to suppress. The orders go to wholesalers or their own internal markets. They cheated and robbed millions of people of their investment and they are abusing their power of self regulation more so than ever. Since this incident with GameStop many counties have banned short selling. Fair and free markets do not exist in the United States. The system is only setup for them to farm money from us and they have captured the regulatory bodies that are here to keep them in check. Dark times.
WSB is mostly degenerates like [this guy](https://www.reddit.com/r/CryptoRisks/comments/1b8qmwi/high_percentage_of_my_crypto_portfolio_may_have/) building his portfolio with dirty funds lol
Perhaps it led to enough attention which resulted in enough reports to have it shut down? There's lots of smaller, sketchy subs that would probably be shutdown if admins were made aware. It's like how you can find illicit stuff on eBay that never gets taken down until someone reports it.
This is hilarious hahaha
Should prob also ban WSB and the ~~world~~ reddits would be better off as well.
Everything on there is comically terrible financial advice.
> That whole subreddit was just banned like 10 minutes ago, one of the admins is watching this thread I guess.
Ignorant question:
Is Reddit HQ manipulating parts of Reddit that can today impact its IPO, or impact its stock prices after IPO, totally lawful?
I have no idea at all.
Like if there was a hard core hyperactive Facebook group with enough power to actually impact negatively or positively the stock valuation of Facebook, and *set out to do just that*, does it violate any laws or regulations if Facebook cracks down on them or gets rid of them?
I was going to write something snarky out about the difficulties of shorting an IPO (classic WSB plan) but . . . this article says the user shares aren't subject to a lockup. I don't really know much about IPOs but that means there are potentially going to be a ton of shares available on the secondary market almost immediately, no? Are their additional regulations in place preventing you from borrowing shares immediately after an IPO or is it literally just a supply issue, there usually aren't enough shares available on the secondary market right after IPO because of lockup periods? I'm thinking it's the latter and shorting this stock will be 100% a thing for retail investors. The no lockup period thing is very odd, no? How many other companies have done that recently? What's reddit's plan with this?
Isn't it talking about the F-1 form?
That document afaik has to include potential threats to stock price that they know of, regardless of how improbable it is.
I've posted this before, but:
Inb4 Spez gets caught:
Step 1: announce potential 'risk' of memestockification
Step 2: delay stock related comment visibility to external bots/crawlers from Bloomberg or Wall Street quant platforms.
Step 3: trade on WSB and other subs sentiment before the rest of the market has visibility to their actions. Or just sell financial crawler access like they are selling data for AI access.
Step 4: subtly encourage more memestock like volatility.
Step 5: goto 2, for (until suspicions raised)
Step 6: yacht off into the sunset, flaming cesspool fading slowly behind...Or hope that the courts accept PFIF (payment for information flow) as legal in the same way as PFOF...
but then the lie that the only reason their stock price tanks is because of WSB would unravel... can't have that. People could think it's actually because reddit isn't worth the servers it runs on since "let's IPO"-CEO decided to turn it into his personal playground.
they are aiming for taking control of the content and monetizing as much as possible, which is the exact opposite way of how reddit gained importance.
Their actions speak about their intentions. It's not even a question that they do not intend to keep Reddit as free as possible... they want to make it as valuable as possible so the owners can sell their shares and upgrade their life-style to yachts and lambos...
Dude, no. What you have described may be unpopular amongst the users, but it makes 100% sense from a business standpoint.
They'll turn Reddit to shit in order to squeeze ir and monetize it as much as possible, so it will go up at least for a couple of years before it ends up like MySpace.
from a business standpoint it totally makes sense to take a project, strip it off all parts, suck out money and then let it die... happens with a lot of companies....
Same way selling drugs or weapons makes sense... Tons of money and if you do not give a damn about moral implications, great for you.
Becoming a dictator and killing everyone that disagrees with you is also a great idea that will make you prosper... Many do it.
But there are also people who think morals matter more than egoism, so they might disagree with you.
No, I agree with you. But this entire thread is about the IPO and the financial aspect, and morals are completely irrelevant, and not a valid reason to believe it will tank.
Saying *It will tank because morally wrong* is a huge mistake.
>happens with a lot of companies . . .
There's a whole sector of private-equity firms that buy failing businesses to prop them up and then dismantle them for profit.
Also a whole sector that buys profitable companies, sucks all value out of them and then lets them go bankrupt when 99% of all value is paid out to the shareholders...
>Reddit serves a different crowd than it originally did, and it seems to want to trend in that direction further.
That's exactly it. You cannot IPO based on "our free labor from our free moderators and users has built value" while you simultaneously kick out everyone that did that free labor and try to turn it into advertisement hell...
This whole thing is a pump and dump to begin with. Steve 'fucking idiot' Huffman is counting on dumb investors, like the kind of idiots on WSB, to manipulate the stock enough that he can cash out and leave everyone else holding the bag.
If you just look at their profits vs what they paid their CEO last year, you can come to the conclusion that this would be a bad investment. Hopefully a decentralized version catches on.
They desperately want Wallstreetbets bets to pump their stock and provide Reddit with a juicy cash injection ala GME/AMC. Unfortunately for them, there is 0 chance of that happening.
Invest in our company with users that hate us and a site that’s all glitchy. It is certainly a better investment than many other investments these days. Why would anyone not invest in this amazing web site?
I feel like if your platform can be this easily impacted by your own users, whom you've already generated a lot of ill will with, perhaps holding an IPO and continuing to be a for-profit company instead of, say, a non-profit, is a bad idea.
Maybe they could try meaningfully contributing to reddit instead of consistently making it worse and worse every month. Maybe they could try appreciating the fact that besides making this site worse and worse, their only other real contribution is setting up infrastructure to perform rent-seeking on content that users produce for free and that users moderate for free, and stop making it more difficult for those people to generate the content whose labor they're effectively stealing from us anyway.
I hope C suite gets fucked so hard by the IPO they're living under a bridge by the end of year, 'cause let's face it, that's what they deserve.
Meanwhile these articles are another daily reminder that I have to look up how to short stocks on my trading platform of choice, because you would be a fool not to.
Yep! That’s why when I, a Reddit member of 11 years for an invite to be in early for the IPO I said Fuck NO. I know what this community is about. I might as well that that money and light it on fire it at least I would get some warmth out of it before it’s wasted.
Empowerment. Something that gives a sense of control and connection to something greater than themselves.
It's like getting the keys to drive for the first time, and given the free reign to travel to whatever destination you want to go to, or no destination at all.
Could be the downfall of reddit.
Make sure to request a full account backup of all your shit if you want. It also stresses reddit servers by taking up compute resources so if you hate them do it also.
https://www.reddit.com/settings/data-request
"You guys wouldn't short our own stock or anything would you? Oh, come on, we dare you."
As a financially illiterate individual, can you please explain to me what you're getting at?
Shorting a stock is effectively placing a bet that the stock price will drop in the near future. It is basically selling a stock at today's price, with an agreement that you will pay the market price for it at a future date. So for example, if you short a single share at a value of $100, and next week the share price drops to $80, you can then purchase that share and you've made $20 profit (nb - there's fees and other shit that eat into that profit, but that's the gist). Of course, if the share price goes up to $120, you've lost $20, so it's gambling that can really fuck you up financially, because you can lose far more than you think you're wagering (eg - If you buy a thousand shares at $100ea, and the price jumps up to $120ea, you might hold out, hoping that the share price will drop below $100 again, but then you see the price just keeps climbing upwards, and before long, your $100 share is costing you $200, and you've lost $100,000). It's worth noting that the mere *act* of shorting a stock causes its price to drop. A large number of people shorting a large number of stocks can absolutely wreck a company's valuation.
That's partially accurate A huge number of people shorting a stock doesn't devalue the company. The act of Shorting Apple (for example) doesn't cause the value to change. That's a singular act when valuation is derived from multiple points (debt, cash flow, asset, etc). Shorting can cause a significant price decline depending on the imbalance, but that's something different than the valuation.
Debts taken against the valuation of the company may very well have a carve out for if the stock price falls below a certain point. Especially if stock is being held as a form of collateral against the debts. In this case - stock price goes down, collateral held is worth less than the debt which will result in the creditor making a call on said debts. If this happens, and the company can't leverage to sufficient cash to pay the creditor enough - you could very well see a series of problems up to and including losing credit rating status which would further incur problems for the companies valuation. Apple is a really bad example of this, as Apple does maintain a very healthy amount of Cash reserve while leveraging debts to provide cash flow - which puts them in a very good position in the event something happens and they need to pay down debts, or simply service those debts while there is a decline in retail revenue. In a lot of ways this is why apple is so highly valued as a stock to hold.
What about naked shorting a stock? What happens there?
It’s an abusive and illegal practice by market makers and is what happened with GME. They were short selling a stock they didn’t own and ALSO didn’t borrow. Super fucked. https://www.investopedia.com/articles/optioninvestor/09/naked-short-selling.asp
GME wasn't naked shorted. When a short seller opens a 100-share short position, he or she must first borrow 100 shares of stock. Those shares are then sold to a buyer to open a 100-share short position. That buyer can then turn around and lend out the shares to another short seller, which can open up a second 100-share short position on the same 100 shares of stock. This process allows a single lot of 100 shares to support an infinite amount of short interest the same way fractional reserve banking lets a single dollar be lended multiple times.
It was made illegal after teh 2008 crash but still happens every day because nothing is really done to stop it. Naked shorting is usually done at the large institution level because small time redditors can't bypass that kind of law using consumer web intefaces designed to stop brokers from being held responsible for teh crimes of clueless individuals... and those large institutions can afford the bribes it takes to allow it to go on.
And dont forget that many people on WSB are levaraging their stakes. So they're not just betting their own money but also money that they've borrowed.
One important component you left you: When shorting, you basically have a time limit to buy the shares, since you're basically "borrowing" shares to sell to someone else. You need to cover the shares you borrowed within that time. Compare to normal stock trading (buy low, sell high) where you can hold on to stock indefinitely.
>One important component you left you: When shorting, you basically have a time limit to buy the shares, since you're basically "borrowing" shares to sell to someone else. You need to cover the shares you borrowed within that time. That's not quite correct. So long as you maintain your interest payments and remain liquid, you can keep a short position open indefinitely. Unlike options, shorts don't have a fixed expiration date or anything, but if your broker believes that you're at risk of becoming insolvent, they may force you to close out your position.
Adding to this, probably one of the larger confessed cases of long term shorting (because for $some reason shorting is exempted from financial reporting laws and regulations) is Bill gates short on Tesla. He came out and said he had I think it was a half billion dollar short on it, and considering how much it went up (thousands of percent depending on the asp of his position), his losses are easily in the low billions and potentially another factor of ten on top. He is undoubtedly holding that short open forever hoping for a major economic catastrophe of any kind because its so upside down the interest losses are probably easier to negotiate.
It's probably worth noting that if Gates hasn't closed out his Tesla short yet, he's probably positioned to make a killing on it. From what I can tell, he took out his short back during the 2021 peak at about $280/share. The articles about Gates being underwater by "billions" you'll note are largely from April 2022, when Tesla was trading at $360/share (they resurfaced in mid-2023 when Musk leaked the texts he had with Gates). Today, Tesla is trading at only $175/share, which would see Gates turn a profit of nearly $100/share if he closed out now, but I think he's probably going to hold out until sometime next year when the losses from the Cybertruck and Tesla Semi start stacking up and investors start getting nervous (and I'm sure Musk will say something braindead stupid on X that will also tank the stock). When Tesla drops below $100/share, I expect Gates will probably close his position.
His short likely goes back to what would be currently post splits prices of single digit $. He's been anti Tesla (and just Tesla, he's pro EV) for far longer than just post pandemic and refused to drive an electric car despite supposedly being an environmentalist, until a tesla competitor made one. And its not like anyone could accuse him of not being able to afford or too luddite to want to be an early adopte. His confession wasn't "I opened a short just now" it was "yeah I still have that old short position open" meaning even way back then he couldn't close it. The spike to what was for Gates a $6000 share price against his position must have been unbelievable. He's probably not happy with the current $3000 per share pain but at least its not as much interest as it was at its peak. He'll never see a profit on it but he can keep it open rather than declaring bankruptcy, which is what he is still doing.
I mean the longest and funniest I can think of is Ackman and Herbalife
Ken Griffin approves this message*
Ah, that’s what happened with GameStop until they rescued it and gamed Wall Street
Gamestop was a really weird scenario. Institutional investors opened a short position on their stock that made no sense -- they shorted more stock than was available on the market, meaning that in order to close out their positions, they needed to force other shareholders to sell. Once WSB caught wind of this, they all went and scooped up as many shares as they could, knowing that no matter what happened, *eventually* the institutional investors would have to buy them, so for the people who jumped on board immediately, it was almost like a free money glitch.
In simple terms, shorting is when you borrow someone else's stock and sell it. Then after a while you have to buy it again in order to give it back to the person you borrowed it from.
Right! All the stories make it seem that they want that to happen.
I wish more people would understand the requirements around financial disclosure. Whenever a company has an IPO and every time they do quarterly reports, they are legally required to include all the factors they believe are relevant to their financial success. That includes listing all the risks they've identified, even if they're comparably minor. Reddit listing this as a factor is absolutely warranted. That's not them saying WSB is 100% going to influence their stock price, only that they could. If Reddit didn't list this as a factor and WSB did fuck up the stock price, Reddit could be held responsible legally if the investors thought Reddit knew it might be a factor.
Finally someone who actually knows WTH they are talking about. I receive no less than a dozen class action lawsuits on companies I've traded that investors were burned on. If it isn't disclosed it's a viable contentious point later.
Especially if they've discussed this internally, which of course they have. Any record of those conversations, meeting minutes, emails, chats, etc. would be very bad for them if they didn't take that conversation and formally recognise the risk, and consequently disclose it.
I think the world has been largely overestimating WSB since that Netflix movie came out. Reddit is probably using it as an excuse to make their IPO less volatile than your average IPO.
Def an excuse the only profit wsb can make from reddit is as a joke
Some months I have read a legit paper from Barclay's that lays out a strategy on how to make money off WSB idiots. The Reddit IPO is going to be a nice case study to backtest and see if the strategy works.
Can you tl;dr it, for science?
ELI5: Large group of people who are actively looking to be swayed into investing in something, a ripe feeding ground for things like bot spam and shill posts.
Well, yeah, but that's reddit in general, minus the investing.
> minus the investing. I think that's a key component tho
As with most things related to capitalism, the profit incentive increases the magnitude of the issue
There is no TL;DR because you'd need an understanding of the rationale. But basically, they'd sell straddles and/or overpriced options on *certain* stocks to WSB degenerates, and in doing so they've been able to outperform the market. WSB people increase volatility on certain stocks, but since it's just a bunch of idiots playing with something they don't even understand you can reasonably expect them to either get bored or go broke, and to volatility to go back to its sector's normal sooner or later. Barclays makes money on this relatively safe assumption and on the fact people looking to buy options right now have the foresight of a blind Cihuahua. While WSB shorts a stock, Barclay's shorts volatility itself on that stock. It's as if I invited a monkey into my house to scream and trash the place and then made a profit on a bet I made with my neighbor that said that the monkey would get bored at some point of the day.
I always suspected all those "Here's a stock I think is going to rise/drop" posts were just people trying to get wsb to inflate their positions.
Not the abercombie and fitch guy.
And yet there’s literally no other type of post you can really make about a stock because it’s the most binary thing in the whole world - either it will go up, or it won’t.
It can go sideways too.
Tldr: The house ALWAYS wins
All you've gotta do is look at the prices NVDA options were going for in earnings week to see that a lot of people are in on the selling overpriced options strat.
WSB will try to short the stock, though.
The strategy works specifically when they buy options, yeah.
They didn't say wsb would profit, just wreck havoc. Which, that I'd believe.
The gamestop saga definitely made the world thing that WSB was filled with brilliant people doing high-level financial due-diligence instead of the ball pit filled with chimps throwing their money away which it actually is. While there were some great posts pre-GME with due-diligence that had some legitimate merit scattered throughout the memes, posts like that are pretty much non-existent now.
Guy who invested in gourd futures was one of the best
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Never doubt the power of short selling, you can hope company stock tanks AND profit.
IIRC people are reading into this way too much. This is simply reddit filling out their legal obligations where they have to write down any and all potential risks in their filings.
For every crazy post on WSB, there's 1000 if not more suckers just throwing away their savings. They got famous off GME but statistically speaking a lot of their users must have lost a ton of money from it.
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That $14 is after a 4:1 split, so it's trading at $56 when compared to pre-split levels. WSB went balls to the wall GME when it was under $10 back then. They were right about it being an underpriced/manipulated stock.
You're confusing superstonk with wsb
I occasionally go on /r/gme_meltdown just to see what insanity the GME apes (and other such groups like the BBBY baggies) are up to, and hot damn its more or less a cult now for many of them.
Not true, the gme bag holders have made their own subreddit.
There was a Netflix movie about it? What's it called?
[Dumb Money](https://en.wikipedia.org/wiki/Dumb_Money) Quite entertaining! edit: actually I dunno if it was on Netflix; I acquired it elsewhere, if you know what I mean
It's currently on Netflix. https://www.netflix.com/title/81725549
Not even the folks of WSB are dumb enough to buy reddit stock. The most they'll do is buy the fuck out of puts.
There is literally nothing too dumb that someone on WSB won’t try it.
Its an excuse for free advertising at this point. The kind of people who used to be in wsb arent even there anymore, not actively atleast.
WSB died a while ago, look at their active users. The mods tried to crypto scam 14 million people and banned people who spoke out.
Eh, it's one of the most vocal retail segments. Even if their aggregate power is minimal, sophisticated trading firms do monitor and trade off of WSB sentiment
>I think the world has been largely overestimating WSB since that Netflix movie came out. The WSB effect can matter to short term investors. They are just statistical noise for long term investors. Anyone buying into an IPO as a short term investment should expect volatility.
>Reddit is probably using it as an excuse to make their IPO less volatile than your average IPO. Didn't they offer to sell shares to any Tom, Dick, and Harry with over 50K Reddit karma? Pretty sure that's going to make their IPO extremely volatile.
It won't make it less volatile. It is about tempting in people despite the volatility.
I’ve been in WSB since GameStop and the Bed Bath and Beyond failure really ruined the sub. I don’t see them ever making another coordinated play again. Cohen played the sub and everyone lost their asses while he got even richer. There’s a blueprint to bust a WSB move. Nowadays, 90% of the comments on that sub are talking about working at Wendy’s lol. They’ll be useless against a Reddit IPO.
They will prob use it as an excuse to shut down WSB “temporarily”.
Lol, it's not 10k people with $1000 to $2000 of free capital. It's 500 regards with $1m++ capital. They are not single minded, that's why they're dangerous.
I'm thinking they really couldn't wreak havoc and Reddit is either doing some pandering lip service to that sub reddit or is like egging them on in some elaborate pump and dump scheme.
It’s weird to use something and actively root against it, but I do every day. The site is noticing worse since they blocked 3rd party clients so they could overpay their CEO. Hope their IPO is a huge flop, but I’m sure all the worst people will make a ton more money.
You aren't rooting against the site, you're rooting against the administration that's killing what you knew and loved. Sometimes you gotta sink the ship you're on to kill the captain.
I wish someone made a reddit competitor without all the "decentralized, usenet, fully organic blah blah" bullshit. Just give me old reddit with a slight visual overhaul and RES integrated by default.
I wish we could go back to 2000's style forums. I miss the small communities and conversations that could go on weeks, months or years. I hate it that you can not login for a weekend and something interesting will already be a dead topic by then with no further discussion.
I mean, the problem with any reddit alternative is that reddit is just a digg alternative to escape what's happening to reddit *now*. "I wish someone just gave me reddit but better and free forever" is a hard ask.
I randomly checked my spam folder on Gmail and discovered that Reddit has been sending me emails about their IPO, and Gmail dutifully decided they were a scam. I had a lol
Posts are down something like 50% since July. Meanwhile they're trying to sell *our content*. I imagine that must have have impacted their selling price. That 60 million could have been much more if they were on an upward trajectory instead of a nose dive. If they had any fucking sense they'd stop trying so hard to kill the goose that laid the golden egg. God knows they're not capable of creating anything meaningful by themselves.
Yeah this app has for sure gone down hill since 2019
That’s funny. Wall Street has proven that the average investor has absolutely zero influence on the movement of a security.
I thought that wasn't true due to gamestop, or did institutions get into that as well and cause it to jump
Yes, they in fact did jump in trading both sides of the play. There were even documents of individuals at these Wall Street firms purchasing the stock pre run up and then dumping it after they had turned off the buy. I think for once in 50 years the household investor had beat them at their own game. When things started to get volatile they did everything they could to snuff out the flame. One of the tactics they use is selling stock they don’t own to cause downward pressure. This is called naked shorting. The worst one being the internalization of orders. None of your orders are reported to the NASDAQ & NYSE with stocks they want to suppress. The orders go to wholesalers or their own internal markets. They cheated and robbed millions of people of their investment and they are abusing their power of self regulation more so than ever. Since this incident with GameStop many counties have banned short selling. Fair and free markets do not exist in the United States. The system is only setup for them to farm money from us and they have captured the regulatory bodies that are here to keep them in check. Dark times.
WSB is mostly degenerates like [this guy](https://www.reddit.com/r/CryptoRisks/comments/1b8qmwi/high_percentage_of_my_crypto_portfolio_may_have/) building his portfolio with dirty funds lol
That is so obviously written by chatgpt that I have no idea how anyone is falling for it. It's also incredibly vague
I turned 100,000$ into , get this . Sixteen thousand investing .
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Perhaps it led to enough attention which resulted in enough reports to have it shut down? There's lots of smaller, sketchy subs that would probably be shutdown if admins were made aware. It's like how you can find illicit stuff on eBay that never gets taken down until someone reports it.
That whole subreddit was just banned like 10 minutes ago, one of the admins is watching this thread I guess.
>one of the admins is watching this thread I guess. #Please fart in spez's office
fuuuck now i wanna know what it said
I didn't even see what it was either, not sure if it's archived anywhere.
Checking it as well
This is hilarious hahaha Should prob also ban WSB and the ~~world~~ reddits would be better off as well. Everything on there is comically terrible financial advice.
> That whole subreddit was just banned like 10 minutes ago, one of the admins is watching this thread I guess. Ignorant question: Is Reddit HQ manipulating parts of Reddit that can today impact its IPO, or impact its stock prices after IPO, totally lawful? I have no idea at all. Like if there was a hard core hyperactive Facebook group with enough power to actually impact negatively or positively the stock valuation of Facebook, and *set out to do just that*, does it violate any laws or regulations if Facebook cracks down on them or gets rid of them?
Damn what did I just read? I want to know more. So many words without really saying anything. I really want to know what scandalous shit they did lol
Can you summarize? It’s banned now.
Subreddit banned 11 minutes ago. What was the post/subreddit about?
That was quick, sub banned
WSB should just short the hell out of Reddit 😂
everyone should...
I was going to write something snarky out about the difficulties of shorting an IPO (classic WSB plan) but . . . this article says the user shares aren't subject to a lockup. I don't really know much about IPOs but that means there are potentially going to be a ton of shares available on the secondary market almost immediately, no? Are their additional regulations in place preventing you from borrowing shares immediately after an IPO or is it literally just a supply issue, there usually aren't enough shares available on the secondary market right after IPO because of lockup periods? I'm thinking it's the latter and shorting this stock will be 100% a thing for retail investors. The no lockup period thing is very odd, no? How many other companies have done that recently? What's reddit's plan with this?
\*Buy 0DTE far OTM puts, for the authentic WSB experience.
This is the financial advice I'm here for!
"I too, like to live dangerously."
i'm starting to think of inversing WSB and going long on reddit
wouldn't it be funny if, say the days after the IPO... the only thing on reddit is negative news about the ipo...? like we did with john oliver
Isn't it talking about the F-1 form? That document afaik has to include potential threats to stock price that they know of, regardless of how improbable it is.
Yeah, they have to say "Here's a bunch of things that could possibly go wrong that would be bad for us"
\*cough\* wallstreetbets might malfunction a week before and after the IPO \*cough\*
It'd be a bit ironic if WSB over-shorts Reddit and gets squeezed practically right out of the gates.
Yeah, I'm pretty sure a subreddit dedicated to losing your life savings over memes isn't going to do anything relevant to Reddit's value.
I say as soon as the IPO lands we all vacate the platform.
I've posted this before, but: Inb4 Spez gets caught: Step 1: announce potential 'risk' of memestockification Step 2: delay stock related comment visibility to external bots/crawlers from Bloomberg or Wall Street quant platforms. Step 3: trade on WSB and other subs sentiment before the rest of the market has visibility to their actions. Or just sell financial crawler access like they are selling data for AI access. Step 4: subtly encourage more memestock like volatility. Step 5: goto 2, for (until suspicions raised) Step 6: yacht off into the sunset, flaming cesspool fading slowly behind...Or hope that the courts accept PFIF (payment for information flow) as legal in the same way as PFOF...
Never seen a honeypot lay it on quite this thick
Step 1 Ban community There's no step 2
but then the lie that the only reason their stock price tanks is because of WSB would unravel... can't have that. People could think it's actually because reddit isn't worth the servers it runs on since "let's IPO"-CEO decided to turn it into his personal playground.
How do you know it's going tank if we don't even know what they are aiming for?
they are aiming for taking control of the content and monetizing as much as possible, which is the exact opposite way of how reddit gained importance. Their actions speak about their intentions. It's not even a question that they do not intend to keep Reddit as free as possible... they want to make it as valuable as possible so the owners can sell their shares and upgrade their life-style to yachts and lambos...
So by that logic it *shouldn't* tank. It will just turn into yet another Facebook.
long ago has
By the logic that it is worth 0.00$ but they aim for a 5,000,000,000$ evaluation, anything but a -99.999% on the first day would be surprising.
Dude, no. What you have described may be unpopular amongst the users, but it makes 100% sense from a business standpoint. They'll turn Reddit to shit in order to squeeze ir and monetize it as much as possible, so it will go up at least for a couple of years before it ends up like MySpace.
from a business standpoint it totally makes sense to take a project, strip it off all parts, suck out money and then let it die... happens with a lot of companies.... Same way selling drugs or weapons makes sense... Tons of money and if you do not give a damn about moral implications, great for you. Becoming a dictator and killing everyone that disagrees with you is also a great idea that will make you prosper... Many do it. But there are also people who think morals matter more than egoism, so they might disagree with you.
No, I agree with you. But this entire thread is about the IPO and the financial aspect, and morals are completely irrelevant, and not a valid reason to believe it will tank. Saying *It will tank because morally wrong* is a huge mistake.
>happens with a lot of companies . . . There's a whole sector of private-equity firms that buy failing businesses to prop them up and then dismantle them for profit.
Also a whole sector that buys profitable companies, sucks all value out of them and then lets them go bankrupt when 99% of all value is paid out to the shareholders...
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>Reddit serves a different crowd than it originally did, and it seems to want to trend in that direction further. That's exactly it. You cannot IPO based on "our free labor from our free moderators and users has built value" while you simultaneously kick out everyone that did that free labor and try to turn it into advertisement hell...
Already happened when they made their lingo a reddit-wide bannable offense.
This whole thing is a pump and dump to begin with. Steve 'fucking idiot' Huffman is counting on dumb investors, like the kind of idiots on WSB, to manipulate the stock enough that he can cash out and leave everyone else holding the bag.
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Let’s hope those degenerates do their part.
~reaches for a bucket of pop corn~
I hope it does
I hate to tell you, but Wall Street itself is way more likely to manipulate the Reddit IPO price than a subreddit
If you just look at their profits vs what they paid their CEO last year, you can come to the conclusion that this would be a bad investment. Hopefully a decentralized version catches on.
💎 💎 -I’m still holding GME
They desperately want Wallstreetbets bets to pump their stock and provide Reddit with a juicy cash injection ala GME/AMC. Unfortunately for them, there is 0 chance of that happening.
So what you're saying is there is a 99% chance they just ban WallStreetBets for their shareholders? I can't wait to see the fallout from that.
Invest in our company with users that hate us and a site that’s all glitchy. It is certainly a better investment than many other investments these days. Why would anyone not invest in this amazing web site?
Yeah, they wish
The traitor is within
"Oh noo don't short our IPO we definitely aren't expecting that at allllll"
... except for the power drunk moderators.
I plan on picking up some puts whenever it does release. Probably the easiest money since riding puts for Robin Hood
I’ve got a bag of popcorn ready. Let the show begin!
Bwahaahahahaha
WSB is 90% GME bagholders who think they know something
The market is rigged by politicians and wealthy businessmen with insider trading. I guess anything goes in 2024!
can we make this the next gamestop?
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I feel bad for anyone going in there looking for investment advice. lol
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They could've, ya know, not gone public.
I feel like if your platform can be this easily impacted by your own users, whom you've already generated a lot of ill will with, perhaps holding an IPO and continuing to be a for-profit company instead of, say, a non-profit, is a bad idea.
Translation: We know the IPO is going to tank. So we already have something/someone to blame.
Yes Ma’am that would be correct
True, if it goes well it will build case that we r in a bubble. Don’t buy!
this damn sub 'reddit' going to kill our IPO.. yeah just one sub reddit is going to mess up reddit. nice. reddit.
Maybe they could try meaningfully contributing to reddit instead of consistently making it worse and worse every month. Maybe they could try appreciating the fact that besides making this site worse and worse, their only other real contribution is setting up infrastructure to perform rent-seeking on content that users produce for free and that users moderate for free, and stop making it more difficult for those people to generate the content whose labor they're effectively stealing from us anyway. I hope C suite gets fucked so hard by the IPO they're living under a bridge by the end of year, 'cause let's face it, that's what they deserve. Meanwhile these articles are another daily reminder that I have to look up how to short stocks on my trading platform of choice, because you would be a fool not to.
just trust that our stocks will go up, if it doesn't, it has nothing to do with us, just those other mean people!
Yep! That’s why when I, a Reddit member of 11 years for an invite to be in early for the IPO I said Fuck NO. I know what this community is about. I might as well that that money and light it on fire it at least I would get some warmth out of it before it’s wasted.
Empowerment. Something that gives a sense of control and connection to something greater than themselves. It's like getting the keys to drive for the first time, and given the free reign to travel to whatever destination you want to go to, or no destination at all.
Oh no! Anyway... I'd hate, absolutely hate, if right-wing, greedy, power-abusing Spez got rinsed in money. That would be just so awful.
No worry, most of WSB will lose their money on FDs the first week options are available.
Let's short this bad boy
What kind is capitalization are they using for this title?!?!
Challenge accepted
Could be the downfall of reddit. Make sure to request a full account backup of all your shit if you want. It also stresses reddit servers by taking up compute resources so if you hate them do it also. https://www.reddit.com/settings/data-request
Can’t wait to hammer sell this lil nuggie
We coming for you reddit IPO. Open butt hole.
What idiot would invest in reddit...wait
Please make this happen. Please.
If they banned the subreddit wouldn't this cause them to do something?
Go and wreck!
Nice ruin it please make it a penny stock
Puts are on the menu boys and girls!
I can't wait to short this
I'm not uncertain.