Reddit IPO: Price, Listing Date, and Stock Allocation for Redditors
Reddit, the popular social media company, is gearing up to go public with one of the most highly anticipated initial public offerings (IPOs) of 2024. Led by CEO Steve Huffman, Reddit aims to achieve a valuation of $6.5 billion and raise up to $748 million through its public offering. The IPO is scheduled for March 21, and Reddit plans to sell 22 million shares at an expected price of $32.50 per share.
Excitingly, around 1.76 million shares have been set aside specifically for Redditors. This means that eligible Reddit users will have the opportunity to purchase separate shares at the initial offering price and sell them without delay when the IPO takes place. Typically, early investors are subject to a mandatory six-month holding period after a stock’s debut.
To participate in this special offer, users must have Reddit accounts created before January 1, 2024. Unfortunately, newcomers to the platform will not be able to take advantage of this opportunity. In addition to Redditors, select users, moderators, and friends and family of various board members and employees will also have the chance to buy shares at the IPO price.
In February, Reddit extended invitations for the IPO to select users based on their level of activity as forum moderators or their “karma” scores. Karma scores reflect the perceived value of users’ contributions and act as shorthand metrics for individual standing within the community. Users who did not receive invitations had the opportunity to sign up in advance for the IPO from March 1 to March 5. It was noted that if capacity was reached before March 5, Reddit would initiate a waitlist.
The plan for Reddit’s IPO has been in motion since the company confidentially filed in 2021. However, it comes as no surprise that many Redditors are unhappy with the move. Heavy users believe that the platform is already suffering from attempts to further monetize a site that hasn’t turned a profit in 20 years. In 2023, Reddit implemented changes to its API and Terms of Service that led to the shutdown of popular third-party Reddit apps. Additionally, Reddit struck a $60 million content licensing deal with Google, allowing the tech giant’s AI to train on the site’s data. Furthermore, Reddit eliminated the option for users to opt-out of personalized ads.
The relationship between Reddit and its volunteer moderators has been strained, especially after many were removed from their subreddits for protesting the company’s API changes. By offering early access to its IPO to moderators, Reddit may be attempting to mend this fractured relationship. However, the response from users has been mixed. Some feel that Reddit’s inability to turn a profit on its own merits is concerning, and selling access to content that was previously unprofitable does not inspire confidence.
As the IPO draws near, it remains to be seen how Redditors will respond to this unique opportunity. While enthusiasm among users may not be overwhelming, there is undoubtedly an air of anticipation surrounding Reddit’s debut on the stock market. As March 21 approaches, all eyes are on Reddit as it embarks on this new chapter in its history.