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A lot of Redditors hate the Reddit IPO | Reddit warned us that its users were a risk factor, and boy do they sound excited about shorting its stock. (www.theverge.com)
submitted 2 years ago by [M, B] to c/technology@lemmy.world
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A lot of Redditors hate the Reddit IPO | Reddit warned us that its users were a risk factor, and boy do they sound excited about shorting its stock.::Reddit seems like a likely candidate for a meme stock. But the actual reaction suggests that r/WallStreetBets isn’t going to send the stock to the moon.

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[–] 12 points 2 years ago (2 children)

Correct, this means anyone will be able to buy/sell shares on the open market.

It's also why the financials are actually open to the public. They have to publicly disclose all financials/risk factors/etc before they invite the public to buy shares The idea is that institutional/wealthy investors are savvy enough to figure that out on their own.

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  • [–] 6 points 2 years ago (1 child)

    The idea is that institutional/wealthy investors are savvy enough to figure that out on their own.

    No, the idea is that there are few enough owners that the owners communicate with the operators directly. If you owned 30% of a privately held company and the other owners lied about the financials to you that would still be a crime.

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  • [–] 1 point 2 years ago (1 child)

    Not sure why you brought up lying, that's totally different (and still illegal, public or private).

    The difference between raising public vs private money is whether or not you are legally required to actively disclose your financials/risks/business plans/etc. I can (legally) raise money from a wealthy family office with nothing but a phone call (basically how most angel investments work). I can't do the same if I'm trying to raise money from a random Joe off the street, that will land me in jail.

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  • [–] 1 point 2 years ago

    from a wealthy family office with nothing but a phone call (basically how most angel investments work).

    Again, like I said, it's because it's assumed that they have a direct connection to you to ask about the company and make decisions.

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  • [–] 4 points 2 years ago (2 children)

    Thanks for the response. But on this:

    The idea is that institutional/wealthy investors are savvy enough to figure that out on their own.

    Do what on their own? I don't quite follow what you are alluding to here.

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  • [–] 0 points 2 years ago

    Public fundraising laws exist to protect the average Joe from losing his life savings to fly-by-night hucksters while trying to ensure companies can still raise capital.

    If you're a wealthy/sophisticated investor, the expectation is that you're already capable of assessing investment risk on your own (including, if you think necessary, getting your own lawyers, direct access to a company's financial reports, due diligence, etc). Average Joe, on the other hand, is required to be given audited financials, a prospectus that's vetted by regulators, explicit statements of share rights, etc etc.

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