Short sellers target Reddit shares as stock slips
Reuters
Published Mar 27, 2024 02:31PM ET
By Saqib Iqbal Ahmed
NEW YORK (Reuters) - Reddit stock's stellar market debut has drawn significant bearish bets against the social media forum in its first few days of trading, data from analytics company Ortex on Wednesday showed.
Based on 2.15 million Reddit shares out on loan, at least 7.1% of the company's free share float has been sold short, according to a preliminary Ortex estimate.
"This is very high for a stock that just started trading, and is an indication that some market participants have a negative view of the future price of Reddit," Ortex co-founder Peter Hillerberg said.
Short sellers aim to profit by selling borrowed shares and buying them back later at a lower price.
On Wednesday, Reddit shares fell 12% to $56.91, snapping a two-day streak of gains. In its market debut on March 21 Reddit shares closed at $50.44, 48% above its initial public offering price.
The stock is off more than 20% from its record high of $74.74 hit on Tuesday.
In the options market, the frantic trading since the IPO cooled somewhat as the retreating shares prompted traders to moderate bullish bets.
Some 53,000 Reddit options contracts had changed hands by 1:30 p.m. ET (1730 GMT), with sentiment leaning toward bearish bets, Trade Alert data showed. The day's volume was projected to hit 82,000 contracts, down from 131,000 contracts traded on Tuesday.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.