As Reddit finally files to go public, the company wrote in its S-1 filing that "meme stock" schemes on r/WallStreetBets could pose a risk to investors.
Reddit cites r/WallStreetBets as a risk factor in its IPO filing::As Reddit finally files to go public, the company wrote in its S-1 filing that "meme stock" schemes on r/WallStreetBets could pose a risk to investors.
They care now that interest rates have increased. That’s kinda what the whole “enshitification” and layoffs are all about. Tech companies desperately scrambling to make a profit.
Profitability is beginning to matter more. 5.25% Federal Funds rate, and a Prime-Rate of like 8.5%, means that it costs 8.5% for businesses to borrow money now.
So that means that if a business borrows at 8.5%, they must grow by 8.5% to just stay even with interest rates and the cost of borrowing money. Because a lot of these "growth" strategies involve losing money for years-and-years, you have to factor in the costs of those losses as well.
When Federal Funds Rate was 0.25%, no one cared about the cost of money or the cost of loans. Today, Wall Street cares, and you can see it in all the stock movements. The less-profitable companies have been getting hammered.
It's only not profitable because the CEO and CFO are taking such massive salaries, $193M and $93M, respectively.
They took $286M and the company lost $90M. They could take $90M less - still taking almost $200M - and Reddit would be profitable. That alone should tell investors that this is a bad investment.
That's not exactly correct. The CEO & CFO are paid a salary way less, like I think around the $300k range. The $285M is in stock options, which only has a value based on the price of the stock. They could hand them back to the company but they would be of no value to the company until the IPO.
All the ingredients are there. All we need is a bit of competition from other platforms and Reddit can join the club with all the other dead platforms like myspace, digg and tumblr.
As mastodon is beginning to seriously compete with Xitter, maybe Lemmy can also contribute to the downfall of Reddit.
Here's a serious question: should we be bracing for a massive influx of stock bros after reddit inevitably find some pretext to shut down wallstreetbets?
Hi there! Looks like you linked to a Lemmy community using a URL instead of its name, which doesn't work well for people on different instances. Try fixing it like this: !wallstreetbets@lemmy.world
I mean, it’s true. WSB has been under scrutiny and introduces the risk of litigation or legal action towards Reddit. That could hurt stock prices. It’s all pretty routine to disclose potential risks in IPO documents or regular annual shareholder documents.