Reddit’s stock price, which soared last Thursday on a blockbuster IPO, soared again on Monday as bullish investors bought options on the social media company.
The tech stock went public at $34, soaring 48% on its first day of trading. It soared again on Monday, adding $13.80 (up 30%) to close at $59.80.
The debut of Reddit-related options trading appeared to be fueling a steady rise in stock prices, with tens of thousands of put/call options on the company beginning to trade amid signs of bullish sentiment. Options can give investors visibility into the future of a stock, with call options giving the buyer the right to buy the stock at a fixed price, and put options giving the buyer the right to sell at a fixed price.
Publishing giant Condé Nast acquired Reddit for $10 million in 2006 and spun it off as a separate company five years later, but has posted billions in paper profits since its IPO.
Reddit has approximately 73 million daily users across 100,000 “subreddits.” Although it’s been growing steadily, it’s still only a fraction of the size of Meta-owned Facebook and smaller rivals like Snap and Twitter/X.
Reddit’s own community has a huge say in the perception of Reddit’s stock. The WallStreetBets subreddit played a key role in driving up the stock prices of GameStop and AMC Entertainment during the pandemic. In a rare opportunity for individual investors, Reddit offered tens of thousands of moderators and users the chance to invest in IPOs normally reserved for a few insiders and institutional investors.
