Should You Invest in Reddit After 48% Pop?

Bloomberg03-22

It’s one of the internet’s top spots for meme-powered stock tips and anonymous hot takes. But does Reddit belong in your portfolio?The question has divided fans of the notoriously rambunctious ...

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But does Reddit belong in your portfolio?The question has divided fans of the notoriously rambunctious ...</p>\n\n<a href=\"https://www.bloomberg.com/news/articles/2024-03-21/reddit-rddt-ipo-should-you-invest-in-the-stock-after-trading-debut-surge\">Source Link</a>\n\n</div>\n","source":"lsy1584095487587","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Should You Invest in Reddit After 48% Pop?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nShould You Invest in Reddit After 48% Pop?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-03-22 16:20 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.bloomberg.com/news/articles/2024-03-21/reddit-rddt-ipo-should-you-invest-in-the-stock-after-trading-debut-surge><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It’s one of the internet’s top spots for meme-powered stock tips and anonymous hot takes. But does Reddit belong in your portfolio?The question has divided fans of the notoriously rambunctious ...</p>\n\n<a href=\"https://www.bloomberg.com/news/articles/2024-03-21/reddit-rddt-ipo-should-you-invest-in-the-stock-after-trading-debut-surge\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"RDDT","symbol_name":"Reddit","start_time":0,"source_url":"https://www.bloomberg.com/news/articles/2024-03-21/reddit-rddt-ipo-should-you-invest-in-the-stock-after-trading-debut-surge","article_id":"1154898542","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1154898542","pubTimestamp":1711095628,"sourceInfo":{"source_id":"lsy1584095487587","name":"Bloomberg"},"weMediaInfo":null,"summary":"It’s one of the internet’s top spots for meme-powered stock tips and anonymous hot takes. But does Reddit belong in your portfolio?The question has divided fans of the notoriously rambunctious platform, where some super users were invited to invest along with insiders at the IPO price of $34, before the general public had access. They watched Reddit surge 48% to $50.44 in its trading debut.The highly anticipated IPO comes as risk-on sentiment is creating a sense of FOMO in the markets more broad","collect":0,"end_time":0,"defaultTopTitle":"bloomberg.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"RDDT":"Reddit"},"translate_title":"48%Pop后该不该投资Reddit？","themeId":"8586641532cd44cda17d79ec32d781fd","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"RDDT":1.1},"content_text":"It’s one of the internet’s top spots for meme-powered stock tips and anonymous hot takes. But does Reddit belong in your portfolio?The question has divided fans of the notoriously rambunctious platform, where some super users were invited to invest along with insiders at the IPO price of $34, before the general public had access. They watched Reddit surge 48% to $50.44 in its trading debut.The highly anticipated IPO comes as risk-on sentiment is creating a sense of FOMO in the markets more broadly, with stock prices soaring and cryptocurrencies hitting records. While Reddit shares jumped Thursday, financial advisers said retail investors should think twice before buying in.“What people really need to think about when they’re investing in an IPO — or in one company — is how much can they afford to lose?” said Kristin McKenna, president of Darrow Wealth Management in Needham, Massachusetts, who specializes in stock options and helping people plan for IPOs. “Because at a certain point it does kind of become gambling.”Pop appealThe appeal of an IPO for many investors is the potential for a “pop.” That’s when a newly public company’s stock, like Reddit, spikes in value on the first day of trading, exceeding the original sale price.There is ample precedent for IPO pops. Between 1980 and 2023, the average first-day return — i.e. the “pop” — of an IPO share was 18.9%, according to data compiled by Jay Ritter, a University of Florida professor whose extensive research on public offerings has earned him the nickname “Mr. IPO.”The issue for individual investors is returns like this don’t always last. Excluding first-day performance, IPO shares underperformed the market by about 19% after three years, according to Ritter’s data. Still, there has been wide variance by the size of the company. Large firms such as Reddit with revenue of $100 million or more underperformed by 1.4% over the three-year period.Matthew O’Connor, a 23-year-old from Phoenix, said he knows the risks of investing in an IPO but wanted to try his hand at playing the pop. The active Redditor bought 100 shares and said he would sell in the event of a price spike.He said he viewed the investment as a bet on the hype around artificial intelligence. Reddit has long relied on advertising to drive revenue, but recently announced a deal with Alphabet Inc.’s Google, allowing its artificial intelligence products to use the company’s data to improve its technology.“The speculation on AI is extremely high,” O’Connor said.IPO risksOther Reddit users decided not to buy into the IPO. Aaron Hoogland, a 39-year-old from northern Virginia, said he passed in part because he doesn’t see a great long-term future for the firm.“My concern when they make that push towards profitability is, ‘Are they going to torpedo the usability of the platform as similar platforms have in the past, and gradually died off?” he said.One problem with IPO stock pops is that they can trigger higher capital-gains taxes, McKenna said. The Internal Revenue Service considers investments held for less than a year as short-term and, in general, subjects their capital gains to higher rates. That hit can cut into returns an investor might clock from the investment.Toe Dip SaleIt can also be hard to navigate the potential volatility of a new stock, even several months after it starts trading, according to Gregory Guenther, a financial planner and co-founder of GRANTvest Financial Group in Matawan, New Jersey. He added that the lockup periods that many investors, such as employees, have on IPO stock can expire months after the debut. If large groups of investors sell, that can trigger price drops.In the case of Reddit, many IPO investors are subject to lockups, but not the prolific users who were offered shares before the public.Jason Alexander, a 40-year-old from Los Angeles who works in IT, dipped his investing toe into the IPO. He is active on WallStreetBets and bought one share at $34 just for fun. He clocked a 30% gain, then promptly sold.\"I just don't feel it has any upside in the short term,\" he said. \"If it dips below the IPO price again I may buy more at that time.\"","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":13,"commentSize":0,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.4","shortVersion":"4.26.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1154898542"}