Reddit, the popular social media platform known for its diverse communities and engaging discussions, is making headlines with its unique approach to its upcoming initial public offering (IPO). In an unprecedented move, Reddit is offering select users the opportunity to become shareholders when it goes public later this year.
The company unveiled its plan in its IPO filing last week, detailing how users can participate in what it calls a “direct share program.” Unlike traditional IPOs that primarily cater to institutional investors, Reddit’s approach aims to involve its community of users in its journey as a publicly traded company.
Reddit has initiated the process by sending out invitations to certain users based on their level of engagement on the platform. Eligible users are selected either based on their contributions as moderators of Reddit forums, known as subreddits, or their karma score, which reflects their overall activity and reputation on the platform.
For users who don’t receive invitations, Reddit is offering a pre-registration option. Adult US residents with Reddit accounts created before January 1, 2024, are eligible to participate, provided they are not current or former employees of Reddit.
The pre-registration period will run from March 1 to March 5, with Reddit opening a waitlist if capacity is filled before the deadline. Once registration closes, confirmed participants will receive further instructions from the company.
While Reddit has not disclosed the IPO share price yet, its recent financials indicate promising growth. Despite reporting a net loss of $90.8 million in 2023, an improvement from the previous year, Reddit saw a significant increase in sales, reaching $804 million, up 21% from 2022. Additionally, the platform’s daily active users surpassed 73 million in the final quarter of 2023, marking a substantial rise from previous years.
This move by Reddit to involve its users in its IPO reflects the platform’s commitment to its community-driven ethos. The decision comes at a time when Reddit’s influence in financial markets has been increasingly recognized. In 2021, Reddit’s WallStreetBets community made headlines for its role in the GameStop stock surge, highlighting the power of collective action among individual investors.
As Reddit prepares to transition into a publicly traded company, it aims to maintain transparency and engagement with its user base. In addition to the direct share program, Reddit users will have the opportunity to submit questions for consideration on its quarterly earnings calls, a privilege typically reserved for Wall Street analysts.
With its IPO set to debut on the New York Stock Exchange under the ticker symbol “RDDT,” Reddit is poised to make waves as the first major social media company to go public in years. As the platform continues to evolve and grow, its decision to involve users in its IPO underscores its commitment to community empowerment and inclusivity in the world of finance.
