Reddit users managed to shift power dynamics on Wall Street when they banded together to boost the shares of popular shorts, most notably GameStop. The day-traders used the social media platform to encouraged a buying frenzy which put major hedge funds at a distinct disadvantage. The funds lost billions as cheap shares in the ignored retail company rocketed to ten times their low. Although the rally was short-lived, the movement proved the massive power of armchair warriors and their preferred social media platforms. – Melani Nathan
Reddit value hits $6 billion after users fueled a stock frenzy
By Priya Anand
(Bloomberg) – Reddit said it raised $250m from private investors, riding a wave of attention after users of the social media website drove a stock market frenzy.
Terms of the funding, led by Vy Capital, push the company’s valuation to $6bn, a spokeswoman said. Reddit intends to spend the cash to develop its advertising business, expand internationally and add video tools, the company said in a statement. The deal was reported earlier by the Wall Street Journal.
Founded in 2005, Reddit allows anyone to submit posts or links to articles and asks the community to vote each one up or down. It slowly went mainstream and is one of the most visited sites in the US Reddit has been a birthplace for some of the internet’s most well-known memes, as well as conspiracy theories and harassment campaigns.
The stock market volatility of recent weeks was orchestrated by a forum on the site called WallStreetBets. GameStop, AMC Entertainment Holdings and silver were some of the bizarre targets of the movement, which had the stated goal of squeezing hedge funds that were selling those assets short.
Reddit capitalized on the attention by running a five-second commercial during the Super Bowl that obliquely paid homage to WallStreetBets. Those five seconds ate up Reddit’s “entire marketing budget,” the ad reads. It should be able to afford more airtime after the new investment.
Read also:
- What happens now after GameStop, Robinhood hype – Dawn Ridler
- What’s really behind the GameStop revolution – With insights from The Wall Street Journal
- Watershed for markets as Reddit Mob slaughter Wall Street pros – With insights from The Wall Street Journal
