WallStreetBets alum buys into Reddit IPO
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Reddit's initial public offering has given Kevin Xu, an active Redditor, access to the inner workings of Wall Street.
Why it matters: Xu rose to fame through Reddit's WallStreetBets channel when he turned $35,000 into over $8 million in about two years through buying and selling common shares only.
"I can finally tell my wife that all that 'wasted time' on Reddit finally paid off," Xu, an investor who plans to participate in Reddit's directed share program, tells Axios.
How it works: Xu received a direct message on Reddit to his account on February 22, inviting him to participate in the IPO, and to fill out a pre-registration form.
- The deadline to pre-register was March 5.
- Last week, Xu received an email from E-Trade to set up his account, which he's funded with $30,000 to buy 690 shares (because it was the "funniest number") out of a maximum of 1,000 shares.
- Reddit has been "extremely transparent" with how the program works, says Xu.
- The company set up a dedicated subreddit and published a video with executives answering questions.
The big picture: Xu was an early participant of the WallStreetBets community, through which he said he learned everything he knows about investing.
- "To me, finance was always very boring — watching CNBC and a bunch of people in suits."
- WallStreetBets on the other hand made him feel comfortable sharing his trading activities and lessons and failures because he could be anonymous.
The intrigue: Xu, who is now the founder and CEO of a social trading app AfterHour, said he hates the "infantilization" of retail traders by Wall Street.
- The us versus them sentiment that Axios observed while sitting in on hours of Clubhouse discussions in 2021 is still what ties retail investors together, according to Xu, because "there are people who still try to put us down."
What we're watching: Reddit priced at $34 per share Wednesday night, and while predicting a stock's first day is always a fool's errand, Xu is expecting plenty of memes at the very least.
- As for concerns that extreme volatility may anger some Redditors who participated in the directed share program, Xu said that the actions of the "silent majority" will be more important than what a "very loud" minority of users are saying.
- He also doesn't think that the vast majority of Reddit users will care about what the company does with its data as it seeks to monetize users' content for AI large language model deals.
- "It's shown time and time again that people just want a good experience."
