Reddit Share Sale Plan Sparks Fear Among Retail Investors

GuruFocus.com11-22 20:52

Fear looms among Reddit (NYSE:RDDT) stock retailers as Advance Magazine Publishers, a shareholder of Reddit with significant ownership, intends to sell up to $1.2 billion worth of its reddit shares. ...

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The selling is anticipated to bring down the price of reddit shares.Hearing this, some bullish investors are optimistic to buy the dip if the price plunge materialized as they faithfully believe in Reddit's fundamentals.Advance Magazine is known to hold 30% stake of Reddit and the company aims to sell 7.8 million shares to be sold at the price between $145.38 to $148.54 per share. Yahoo reported that Advance plans to use Reddit's equity as collateral for a credit facility.Essentially, Advance is borrowing money against the value of their Reddit shares. To do this, they are offering a portion of their Reddit shares  for sale at a discounted price at $145.38 to $148.58 below the current traded price at $158.02 per share.Advance is not exiting. In order to retain their control over Reddit, Advance is als","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4547":"WSB热门概念","BK4077":"互动媒体与服务","RDDT":"Reddit","ISBC":"投资者银行","BK4211":"区域性银行"},"translate_title":"Reddit股票出售计划引发散户投资者担忧","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ISBC":1,"RDDT":1},"content_text":"Fear looms among Reddit (NYSE:RDDT) stock retailers as Advance Magazine Publishers, a shareholder of Reddit with significant ownership, intends to sell up to $1.2 billion worth of its reddit shares. The selling is anticipated to bring down the price of reddit shares. \nHearing this, some bullish investors are optimistic to buy the dip if the price plunge materialized as they faithfully believe in Reddit's fundamentals. \n\nAdvance Magazine is known to hold 30% stake of Reddit and the company aims to sell 7.8 million shares to be sold at the price between $145.38 to $148.54 per share. Yahoo reported that Advance plans to use Reddit's equity as collateral for a credit facility. \nAdvance Magazine Is Not Exiting\nEssentially, Advance is borrowing money against the value of their Reddit shares. To do this, they are offering a portion of their Reddit shares (7.8 million shares) for sale at a discounted price at $145.38 to $148.58 below the current traded price at $158.02 per share.\nAdvance is not exiting. In order to retain their control over Reddit, Advance is also buying derivatives on the Reddit shares. Derivatives are financial instrument that derive the value from the underlying shares, which should enable Advance to retain each stake in Reddit without selling off completely. \nBut I say they can only fear when Advance cannot repay the loan as agreed. If they fail to repay, the lender will obviously exercise its right to take the possession of Advance's Reddit shares that used as collateral at agreed price. \nIf Advance is able to fulfill their repayment obligations, then no need to fear of the price will go down because of this news.\nYou can make more informed investment decisions. Visit GuruFocus today and dive deeper into Reddit performance with Charts & Guru InsightsThis article first appeared on \nGuruFocus.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"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":"4.29.2","shortVersion":"4.29.2","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/2485263286"}