The New York Stock Exchange trading floor is preparing for the March 21, 2024 initial public offering of social media platform Reddit in New York City.
Spencer Pratt | Getty Images
Reddit The company’s stock price tumbled after a rebound from the social media company’s initial public offering last week.
The stock closed at $49.32, ending the week lower than Reddit’s closing price on its debut on the New York Stock Exchange. The closing price last Thursday was $50.44. The stock market is closed on Good Friday.
Reddit shares began a downward spiral on Wednesday, closing down about 11% at $57.75. That same day, Hedgeye Risk Management described Reddit stock as “significantly overvalued” in a report Quote Bloomberg News reported that the company was “short benched.”
Earlier this week, Reddit disclosed in a company filing that CEO Steve Huffman sold 500,000 shares. Ben Silverman, vice president of research at Verity, told CNBC that the move was expected and represented only “a portion of his holdings.”
Meanwhile, Reddit Chief Operating Officer Jennifer Wong revealed that she sold 514,000 shares and now holds 1.4 million shares in the company.
“There’s always a bit of a disconnect because the purpose of going public is twofold,” Silverman said. “It’s not just about creating liquidity for the company itself so that it can expand and grow. In these cases, it often allows insiders to cash out to create liquidity, and that’s something executives have to consider.”
“If the outlook is so bright, why are insiders selling?” Silverman added.
Reddit shares opened the week higher, soaring 30% on Monday. Despite New Street Research giving the company a neutral rating, the company’s shares rose 8.8% to close at $65.11 on Tuesday.
Analysts at New Street Research wrote in a note that they would not change their $54 price target and expected “volatility on the first earnings report.”
About The Author
