FILE PHOTO: A trader wears a t-shirt with Reddit's logo, at the New York Stock Exchange (NYSE) in New York City, U.S., March 21, 2024. REUTERS/Brendan McDermid/File Photo
NEW YORK (Reuters) - Reddit stock's stellar market debut has drawn significant bearish bets against the social media forum in its first few days of trading, data from analytics company Ortex on Wednesday showed.
Based on 2.15 million Reddit shares out on loan, at least 7.1% of the company's free share float has been sold short, according to a preliminary Ortex estimate.
"This is very high for a stock that just started trading, and is an indication that some market participants have a negative view of the future price of Reddit," Ortex co-founder Peter Hillerberg said.
Short sellers aim to profit by selling borrowed shares and buying them back later at a lower price.
On Wednesday, Reddit shares fell 12% to $56.91, snapping a two-day streak of gains. In its market debut on March 21 Reddit shares closed at $50.44, 48% above its initial public offering price.
The stock is off more than 20% from its record high of $74.74 hit on Tuesday.
In the options market, the frantic trading since the IPO cooled somewhat as the retreating shares prompted traders to moderate bullish bets.
Some 53,000 Reddit options contracts had changed hands by 1:30 p.m. ET (1730 GMT), with sentiment leaning toward bearish bets, Trade Alert data showed. The day's volume was projected to hit 82,000 contracts, down from 131,000 contracts traded on Tuesday.
(Reporting by Saqib Iqbal Ahmed; Editing by Richard Chang)
