Some 7% of Reddit’s free share float (or more) has been sold short so far, according to an estimate from the analytics company Ortex cited by Reuters. That’s something the social platform was worried would happen, noting in its prospectus that retail traders in its subreddits (and particularly on r/WallStreetBets) could cause “extreme volatility” in Reddit’s share price. Those Redditors had already signaled in posts that they were planning to short the stock.

Public data revealing short interest positions on Reddit won’t be available until April 9.

Reddit shares fell as much as 11% at market open to a low of $51.52 after an already-bad Wednesday. Bloomberg reports that Wednesday’s decline was in part due to a Hedgeye Risk Management report naming Reddit as a short idea, saying the stock could plummet 50%.

Reddit’s share price in the low $50 range is still well above its IPO price of $34, and even above its impressive first-day closing price of $48, which had investors chattering about the company’s impressive gains.

  • ColeSloth
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    3 months ago

    They say as much as 50%. I say it’s going to go a bit lower. It went up to almost $75, but I think it will go under $25 before it starts to rebound. I bought my put options Monday morning. So far the stock is doing what I expected it to do, and I expect the decline in price will persist for the next couple months.

    I don’t have a big enough bankroll or time to sit at my computer to pull off short selling, so puts are my best bet. I will feel the tiniest bit bad for the people who made the put contracts to buy getting reemed, but honestly, if they knew what they were getting into. Like if they actually knew reddit and really researched things, they never would have been offering put contracts to begin with on Monday.