Received DSP invitation today. Why I've decided not to participate

[corbco]

I was going to, really. Just for shiggles. I have money I can afford to lose, and this is what qualifies as "fun" for some of us. "What If...", y'know?

But I've decided not to.

• Reason One: I decided to take more seriously the fact that there is no lockup even for existing shareholders, which implies that much trading on day one will be insiders trying to unload As Fast As Possible -- before the price goes down any further!
• Reason Two, a.k.a. laziness: I'd have to open an ETrade account, and fund it, before I know how many / if any shares I'd get. If I don't get any, I'd have to get that funding back. Oy, the paperwork. And setting up transfers.

Y e a h ..., that's just too much work, and not enough fun.

So, I'm out.

 

[abl7]

@corbco There is a lockup on page 215 of the prospectus which ties up most of the main stock holders for a bit - see below. Setting up an ETrade account is a real pain in the ass though.

"In connection with this offering, we and all of our directors and executive officers, the selling stockholders, and certain other record holders that together represent approximately 82% of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock are subject to lock-up agreements with the underwriters agreeing that, subject to certain exceptions, without the prior written consent of Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC, on behalf of the underwriters, we and they will not, in accordance with the terms of such agreements, during the period ending on the earlier of (i) the opening of trading on the third trading day immediately following our public release of earnings for the quarter ending June 30, 2024 and (ii) 180 days after the date of this prospectus (such period, the “Lock-up Period”):"

 

[sarahest]

@corbco What is the company???

 

[nhwarmbythefire]

@sarahest Reddit - latest amended S-1 here - https://www.sec.gov/Archives/edgar/data/1713445/000162828024010137/reddit-sx1a1.htm

 

[sarahest]

@nhwarmbythefire I was just wondering because that info was mentioned nowhere.

 

[nhwarmbythefire]

@sarahest No problem - it's a fair question - it's one of the more over-discussed IPO's on Reddit at the moment because it's Reddit. And also - because Reddit has a what's called a friend and family offering - Ie a directed share program (DSP). The DSP was extended to active moderators and redditors.

The Reddit IPO is also being closely watched because the IPO market has kinda dried up in past few years.

In 2021 - there were over 1000 IPOs - in 2022 there was only 181 IPOs and in 2023 only 151 IPOs. So Reddit is a one of the closely watched IPOs to see how it goes.

 

[twentyseventeen]

@nhwarmbythefire Those IPO stats are heavily influenced by SPACs though. Yes the IPO market is much weaker now than 3 years ago, but it's not as dried up as the SPAC boom suggests.

 

[nhwarmbythefire]

@twentyseventeen Very true - there were over 600 SPAC IPOs in 2021 iirc - which is kinda insane imho.

 

[dudr17]

@nhwarmbythefire Here's to another 600 more in 2024 (if so it'll be a wild ride again.)

 

[skipper0661]

@corbco Same, give it 6mo and buy at a discount

 

[mickaela]

@corbco I reached the same conclusion. I was originally wondering if I could buy at IPO price and flip it. But after seeing how high the valuation is, I realize it's just them trying to cash out while convincing Redditors they're getting an "exclusive deal". So I decided to pass.

 

[soikeoworldcupxemkeo]

@corbco I'm pretty sure employees and insiders have a 180 lock up period where they cant sell.

 

[leahratliff]

@soikeoworldcupxemkeo based on what? Most articles are saying there is no lockup period

 

[godicon22]

@leahratliff Right from the S-1

In connection with this offering, we and all of our directors and executive officers, the selling stockholders, and certain other record holders that together represent approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock are subject to lock-up agreements with the underwriters agreeing that, subject to certain exceptions, without the prior written consent of Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC, on behalf of the underwriters, we and they will not, in accordance with the terms of such agreements during the period ending on the opening of trading on the third trading day immediately following our public release of earnings for the quarter ending 2024 (such period, the “Lock-up Period”)”

 

[prophecy7777]

@corbco Used to manage DSP’s of IPOs while I was at BofA. It’s super stressful and frustrating from the institution’s perspective to manage these plans as well. If there’s no lockup provision, getting shares allocated via DSP can be (theoretically) lucrative due to the difference between pricing and what it actually opens at

 

[resjudicata]

@corbco Reddit is going to be a doo doo stock pick.

 

[newway]

@corbco This is shaping up to be a greedy when others are fearful scenario. But I dunno.

 

[corbco]

@newway I agree with you, plus I'm a natural-born contrarian to boot; together, those struck me as an Opportunity.

 

[edgsauhngiadrh]

@corbco Those talking about valuation are missing the fact that the institutions sponsoring this IPO are extremely unlikely to allow it to drop below the IPO price any time soon.

Regardless of the prospects of this company, probabilities strongly favor the stock opening well above the IPO price.

Those who are offered and do not take the shares are likely costing themselves free money.

 

[austinmiles89]

@edgsauhngiadrh I can't put in a lot, but I do have some money I can put in (Between $1-10k) that I can afford to lose.

That's the most important part: If it tanks, my loss won't tank me, only sting a bit.

A small part of this for me was beating myself up in hindsight for not being forward thinking a long time ago with BC. I'm not talking the "Buy at $1000/$1000" stage, I was on forums like [H]ardOCP back when it was all first spinning up, back in the days of someone paying 10k BC for a pizza. If I had gone and offered a nickel per back then when it was worth a penny, I'd wouldcouldshoulda been rich.

This time, I have a bit of disposable money to use and I have decided to use it. It's not like I buy much of anything for myself anyway.