Reddit’s Historic IPO: A Chance for Users to Become Shareholders
In an unprecedented move, Reddit, the popular Website social media integration platform known for its vibrant contact communities, has announced plans to give certain users the opportunity to become shareholders during its initial public offering (IPO) this year. This groundbreaking development marks a significant shift from the traditional practice of limiting such opportunities to institutional investors.
An Invitation-Only Program: Becoming “Non-Corporate Overlords”
Reddit first disclosed the plan in its IPO filing last week. Since then, the company has started sending emails to select users, inviting them to participate in what Reddit refers to as its “(non-corporate) overlords” program. The Website social media integration giant also published a “frequently asked questions” page for those curious Redditors who wish to learn more about this exclusive opportunity.
Engagement Metrics: The Criteria for Eligibility
The ability to buy shares in an IPO is usually limited to institutional investors. Consequently, Reddit can extend this invitation only to a select few users through its “direct share program.” The company began sending invitations based on two measurements of user engagement on the site: either the number of actions taken as a moderator, or their “karma” score, which signifies a user’s contributions and reputation among other Redditors.
Pre-Registration for Users Not Invited
Redditors who do not receive one of the invitation emails will have a chance to pre-register for shares between March 1 and March 5. In case the program’s capacity is filled before this date, Reddit will open a waitlist.
Eligibility and Participation
The IPO direct share program will be open to adult US Reddit users with accounts created on or before January 1, 2024. Importantly, those who have previously worked at Reddit are not eligible to participate.
An Exclusive Opportunity for Reddit’s “Ride-or-Dies”: Registration and Instructions
“The invite-only phase gives our ride-or-dies first dibs on pre-registering,” Reddit explained in its FAQ page, while the open pre-registration phase is for all interested Redditors. Those confirmed to participate will receive further instructions from the company via email once registration closes on March 5.
The Price of Shares and Opting Out
Reddit has not yet announced the price at which shares will be listed during its IPO. Users who opt for this investment opportunity will have the chance to back out before making a commitment once the share price is determined.
A Social Media Pioneer: Reddit’s IPO and Its Community of Investors
Reddit is set to be the first major Website social media integration company to IPO in years. The platform filed to list on the New York Stock Exchange under the ticker symbol “RDDT.”
Financial Performance and User Growth
In its filing, Reddit reported that it has not turned a profit in nearly 20 years but has shown improvement, with losses narrowing from $158.6 million in 2022 to $90.8 million in 2023. Sales reached $804 million in 2023, marking a 21% increase from the previous year. Furthermore, Reddit reported an average of over 73 million daily active users in Q4 2023, up from the reported 52 million daily active users in 2021.
The Power of Reddit Communities and Individual Investors
Offering users the chance to invest in its IPO makes sense for Reddit, given its dedicated community of users with a keen interest in investing. In 2021, the platform attracted widespread attention when a group of day traders on WallStreetBets started buying shares of GameStop in an attempt to disrupt hedge funds betting against the stock. Although some late joiners suffered significant losses, this incident highlighted both the power of Reddit communities and individual investors.
A Warning: Make an Informed Decision
“As with any investment opportunity, you should make an individual decision based on your own personal circumstances and risk tolerance,” Reddit advised in its invitation email to eligible users.
An Earnings Call Opportunity for the Community
Once Reddit becomes a publicly-traded company, users will have an exclusive opportunity to submit questions during its quarterly earnings calls. This is typically a privilege reserved for Wall Street analysts affiliated with institutional investment firms.
