Reddit, renowned for its vibrant communities and lively discussions, is shaking up the headlines with its innovative approach to its impending initial public offering (IPO). In a groundbreaking move, Reddit is extending the opportunity to selected users to become shareholders as it gears up to go public later this year.
The company unveiled this bold initiative in its IPO filing last week, outlining its unique “direct share program.” Departing from the conventional IPO model primarily tailored for institutional investors, Reddit’s strategy aims to integrate its user community into its journey as a publicly traded entity.
Reddit has kickstarted the process by sending out exclusive invitations to certain users chosen based on their contributions as moderators of Reddit forums, known as subreddits, or their karma score—a metric reflecting their overall activity and standing on the platform.
For those who may not receive direct invitations, Reddit is offering a pre-registration avenue. Adult US residents with Reddit accounts created before January 1, 2024, are eligible to take part, provided they are not current or former employees of Reddit.
The pre-registration window is set to open from March 1 to March 5, with Reddit initiating a waitlist if capacity fills up before the deadline. Following the closure of registration, confirmed participants will receive further guidance from the company.
Although Reddit has not yet disclosed the IPO share price, recent financial reports signal promising growth. Despite recording a net loss of $90.8 million in 2023—an improvement from the preceding year—Reddit witnessed a substantial surge in sales, totaling $804 million, a 21% increase from 2022. Moreover, the platform’s daily active users surpassed 73 million in the final quarter of 2023, marking significant growth from previous periods.
Reddit’s decision to engage its users in its IPO epitomizes the platform’s dedication to its community-centric values. This move arrives at a juncture where Reddit’s influence in financial spheres is increasingly acknowledged. In 2021, Reddit’s WallStreetBets community garnered attention for its impact on the GameStop stock surge, spotlighting the potency of collective action among individual investors.
As Reddit gears up for its transition into a publicly traded entity, it remains committed to fostering transparency and interaction with its user base. Alongside the direct share program, Reddit users will have the opportunity to submit questions for consideration during its quarterly earnings calls—a privilege traditionally reserved for Wall Street analysts.
With its IPO poised to debut on the New York Stock Exchange under the ticker symbol “RDDT,” Reddit is positioned to make a significant splash as the first major social media company to go public in years. As the platform continues to evolve and expand, its decision to involve users in its IPO underscores its commitment to community empowerment and inclusivity within the financial landscape.
