This is How Reddit Users Can Take Part in the Company’s IPO

During its first public offering (IPO) this year, Reddit intends to do something really out of the ordinary: offer some users the opportunity to become shareholders.

After announcing the concept in its initial public offering (IPO) filing last week, the social media platform is now providing additional information on how users might become “(non-corporate) overlords,” as Reddit put it. Reddit has started notifying certain users via email about the chance to take part, and for those who are interested, the site has created a “frequently asked questions” website.

Since institutional investors are usually the only ones allowed to purchase shares in an initial public offering (IPO), Reddit will have to limit the number of users it invites to join a “direct share program.”

Last week, Reddit announced that it started inviting users to the IPO based on two metrics for engagement: the amount of actions a user has taken as a moderator of a forum on the platform (also called a “subreddit”) or their “karma” score, which represents their reputation and contributions among other users.

Those Redditors who didn’t get an invitation email can still pre-register for the IPO from March 1st until the 5th. Prior to March 5, Reddit will establish a waiting list in the event that the program reaches its limit.

Adults in the United States who have an account that was founded on or before January 1, 2024, and who are not current or former Reddit employees will be eligible to participate in the IPO direct share program.

The ride-or-die members get priority during the invite-only pre-registration phase, while all Redditors can participate in the general pre-registration phase, according to the company’s FAQ page. The company will send a confirmation email to users who have participated in the direct share program with further instructions when registration closes on March 5.

The initial public offering (IPO) price for Reddit shares has not been determined yet. When shares are priced, users might choose not to buy them.

It will be years before any big social media firm goes public, but Reddit is about to change that. Its application to list on the New York Stock Exchange under the ticker symbol “RDDT” was submitted last week in a filing with the Securities and Exchange Commission.

In spite of what seems like a reduction of losses, the company has not turned a profit in its nearly 20 years of operation, according to the filing. Compared to its $158.6 million loss in 2022, Reddit’s net loss of $90.8 million in 2023 was an improvement.

Up 21% from $666.7 million in 2022, the company’s sales in 2023 reached $804 million. As for the last three months of 2023, Reddit reported an increase in daily active users to over 73 million, up from 52 million in 2021.

Offering people the chance to participate in its initial public offering (IPO) is a bizarre but logical move for Reddit, a network with a community of users who are notoriously (or perhaps famously) interested in investing.

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There was a huge ruckus in the market in 2021 because a group of day traders on Reddit called WallStreetBets started buying GameStop shares to punish hedge funds that were betting against the firm. Despite the fact that many Redditors who got in on the action late lost a ton of money, the event highlighted the strength of the Reddit community and individual investors.

Reddit warned that, “As with any investment opportunity, you should make an individual decision based on your own personal circumstances and risk tolerance” when referring qualified individuals to the IPO over email.

In its frequently asked questions, the company also mentioned that after it becomes publicly traded, Reddit users would have the chance to ask the company questions that are normally only answered by Wall Street analysts from big investment companies on its quarterly earnings calls.

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