The trading floor of the New York Stock Exchange is preparing for the initial public offering of social media platform Reddit, which is able to happen on March 21, 2024 in New York.
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shares are falling after a pointy rally following last week’s IPO of the social media company.
Shares closed at $49.32, ending the week below Reddit’s closing price on its first day of trading on the New York Stock Exchange. Last Thursday they closed at $50.44. Stock exchanges are closed on Good Friday.
Reddit’s stock began its downward spiral on Wednesday, when it closed down about 11% to $57.75. That day, Hedgeye Risk Management called Reddit’s stock “grossly overvalued” in a report. quoted via Bloomberg News, adding that the company was on the company’s “short bench.”
Earlier this week, Reddit revealed in a company filing that CEO Steve Huffman sold 500,000 shares. Ben Silverman, vice chairman of research at Verity, told CNBC that this was expected and only represents “part of his holdings.”
Meanwhile, Reddit COO Jennifer Wong revealed that she sold 514,000 shares and now holds 1.4 million shares of the company.
“There is always some disagreement because the purpose of taking a company public is two-fold,” Silverman said. “It’s not just about generating liquidity for the company itself to grow and expand. In such situations, it often allows insiders to withdraw funds to generate liquidity and this is something that management must take into account in this case.”
“If the prospects are so good, why are insiders selling?” Silvermann added.
Reddit shares began the week on a high and were up 30% on Monday. The company’s shares then rose 8.8% on Tuesday, closing at $65.11, even after New Street Research issued a neutral rating for the company.
On Good Friday the markets are closed.
New Street Research analysts wrote in a note that they’d not change their $54 price goal and that they expected “volatility in the first earnings report.”
To watch: Reddit shares fall after CEO Steve Huffman sells 500,000 shares.
