The company wants users to get in on the action. Should they though?
Credit: Rafael Henrique/SOPA Images/LightRocket via Getty Images
Reddit (RDDT) is set to go public soon and is as of now, one of the most highly anticipated initial public offerings (IPOs) of 2024. The social media company, led by CEO Steve Huffman, is seeking a $6.5 billion valuation and is aiming to raise up to $748 million in the company’s public offering.
Planned for March 21, the offering is imminent, and Reddit said last week that it will be selling 22 million shares at an expected price of $32.50 per share to help reach that aforementioned $748 million. Around 1.76 million shares of the stock have been isolated for Redditors — meaning they’ll have the opportunity to buy separate shares at the initial offering price and can sell them when the IPO happens without delay. A mandatory six-month holding period is typical for early investors after a stock debut.
These isolated shares are mostly for the holders of Reddit accounts made before January 1, 2024, so if you’re new to Reddit you can’t get in on this. The offer to buy the stock applies to select users, moderators and then “friends and family of various board members and employees,” according to Yahoo Finance.
Back in February, select users were given invitations for the IPO with participants chosen based on their level of activity as forum moderators on the platform, or their “karma” scores, which reflect the perceived value of users’ contributions and work as shorthand metrics for individual standing within the community. Users of Reddit who did not receive an invitation had the chance to sign up in advance to purchase shares in the IPO from March 1 to March 5. If the program reached its capacity before March 5, Reddit would initiate a waitlist.
Reddit’s IPO launch has been in the works since the company first confidentially filed in 2021. Unsurprisingly, Redditors hate this move. Most heavy users seem to feel that the site is already suffering from Reddit’s attempt to further monetize a platform that hasn’t turned a profit in 20 years. This includes, most notably, Terms of Service changes in 2023, specifically to its API, that forced developers of very popular third-party Reddit apps to shut them down. Then there’s the $60 million content licensing deal with Google that allows its AI to be trained on the sites data. Additionally, Reddit removed users’ option to opt-out of personalized ads.
The relationship between Reddit and its free workforce of volunteer moderators is already in a precarious place, especially after many were removed from their subreddits after protesting the company’s API changes. Thus, Reddit allowing moderators early dibs to its IPO can be thought of as an attempt to “make good” to those who feel slighted.
Many users’ enthusiasm about grabbing the stock is not overwhelming, however. “They failed to turn a profit as one of the most popular websites in the world for decades and their only path to profit now is selling access to the previously-not-profitable shitposts to scrapers who will feed it to their AI,” wrote user DPSnacks on the r/investing Subreddit.
Assistant Editor, General Assignments
Currently residing in Austin, Texas, Chance Townsend is an Assistant Editor at Mashable. He has a Master’s in Journalism from the University of North Texas with the bulk of his research primarily focused on online communities, dating apps, and professional wrestling.
In his free time, he’s an avid cook, loves to sleep, and “enjoys” watching the Lions and Pistons break his heart on a weekly basis. If you have any stories or recipes that might be of interest you can reach him by email at [email protected].
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