Reddit Jumps Into Stock Market – Is It the Beginning Of An End?

Remember the good old Reddit, where people post life stories, ask questions and share fun incidents? Well, it has jumped into the stock market. While the majority of social media sites today rely on ads, this is the first time a social media site has said “No thank you” to an aggressive ad strategy and jumped into the stock market instead.

This means any user with a little knowledge of the market and a solid internet connection to keep an eye on can easily start investing. Moreover, these internet companies are not just offering fast speed and affordable internet but also dedicated customer service. For instance, Xfinity customers can dial the Xfinity phone number to request assistance. Now, with easy accessibility of the internet, anyone can start trading, learn new things, or just interact with people.

How Reddit Is Different From Other Social Media Sites?

Reddit is known to be the third-most used site with a more interactive, long blog form content that sparks conversations over fun, complex, and even political topics. People from all around the world love sharing their experiences and users then talk about it. Simply, put, there is no privacy of account but most users prefer to post anonymously.

While the model is slightly different from other social media sites, its primary purpose is to keep people connected just like any other social media site. One thing that truly distinguishes Reddit from the rest of the social media sites in the market is that even after so many years; the platform has not evolved into an ad-bombarding machine. Moreover, even after nearly 18 years it still has 62.24 million daily active users.

So how is Reddit generating money, you ask?

Well, although Reddit hates the idea of advertising and censorship, it finally gave up and started doing both but in a very restricted amount.

Reddit has recently debuted as a publicly traded company. While the first-day closing at 48% high has made some people hopeful, Wall Street experts are becoming skeptical by the minute. As a Reddit user, this can be your make-and-break chance to jump into social businesses, however, before you take a leap of faith, market analysis is a must.

Why Wall Street Experts Are Skeptical?

Wall Street right now is betting everything on AI. A good AI company currently is not just making more; it is expected to be the future. In this context, tech companies with no AI or social media companies are now being considered old news. Financial analysts believe that since a social media company as good as Reddit has finally jumped into trading and has already gained enough hype, this might be short-lived.

Moreover, they are expecting the users and traders to wait for the next 6 months in order to understand the overall trends. Currently, this extreme hype looks like a pump-and-dump situation, which means that since most old and new traders already have made enough within the first day, most of the buyers might end up selling everything within the next few weeks depending on the market situation.

Is Buying Reddit Stocks A Good Idea?

Financial experts have reached this conclusion after carefully analyzing the trends within Reddit. Especially because even after 18 years and so many users, the company has failed to turn in any, profit whatsoever. Moreover, right from its inception, it has struggled with money. While the management tried to stick with their promise of not censoring and not advertising anything on the platform, they eventually gave in under financial pressure.

This means that debuting into the stock market might be a big ticking time bomb when your users are also your investors. One new feature or a change in the layout might trigger a pump and dumb situation. Moreover, if the company ends up sticking to the old model with no changes and no features at all, this might become boring for the users and the stockholders might give up.

Currently, the management has to walk a thin line between keeping things interesting, sticking to the roots as well as keeping the audience and stockholders happy. According to business experts, Reddit has willingly jumped into an “all-in” situation. This means it is the last chance for the social media giant to prove itself. In case, it does not perform well in the market, this might cost the company everything and more.

Wrap up

As an avid Reddit user, this is a very promising step but only if the planning and execution are right. However, investing in a volatile market with such a weak product is not a good idea unless you have a few trading tricks up your sleeves. In the case of Reddit, this is more important because the company has failed to show a good profit even after so many years in the market.