When Reddit launches its initial public offering this year, it intends to take the unique step of allowing certain users to become shareholders.
The social media giant revealed the strategy in its initial public offering (IPO) filing last week, and it is now disclosing additional information on how people might become its “(non-corporate) overlords,” as Reddit puts it. Reddit has started to send emails to a chosen group of users inviting them to take part. In addition, the site has created a website with frequently asked questions for those who are just curious.
Since institutional investors are usually the only ones eligible to purchase shares in an IPO, Reddit will only be able to invite a limited number of users to take part in a scheme known as a “direct share program.“
Redditors can pre-register to purchase shares in the IPO between March 1 and March 5 if they did not receive one of those invitation emails. In the event that all program slots are taken before March 5th, Reddit will create a waitlist.
Adult US Reddit users without active or past Reddit employee accounts who started their accounts on or before January 1, 2024, are eligible to participate in the IPO direct share program.
The firm stated on its FAQ page that “the open pre-registration phase is for all Redditors, while the invite-only phase gives our ride-or-dies first dibs on pre-registering.” Users who have been verified to take part in the direct share will receive an email from the company sometime after registration closes on March 5.
The price at which Reddit’s IPO shares will be listed has not yet been determined. When shares are priced, users will have the option to not buy them.
The first significant social media business to go public in years is expected to be Reddit. According to a Securities and Exchange Commission filing from last week, it sought to list on the New York Stock Exchange with the ticker symbol “RDDT.”
Although its losses seem to be decreasing, the company stated in the filing that it has not reported a profit in its nearly 20-year history. Compared to its $158.6 million loss in 2022, Reddit’s 2023 net loss of $90.8 million was an improvement.
Sales for the company increased by 21% to $804 million in 2023 from $666.7 million in 2022. In addition, Reddit said that during the last three months of 2023, it had an average of over 73 million daily active users, an increase over the 52 million daily active users it had in 2021.
Offering people the chance to participate in Reddit’s initial public offering (IPO) makes sense, despite the fact that it’s a relatively odd move for a platform whose user base is known for being infamously keen in investment.
When a group of day traders on the Reddit site called WallStreetBets started purchasing GameStop stock in 2021, it shocked the market as a whole. The goal was to undermine hedge funds that were placing bets on the company. A significant number of Redditors who joined the excitement later suffered enormous losses.
In an email encouraging qualified users to take part in the IPO, Reddit stated, “As with any investment opportunity, you should make an individual decision based on your own personal circumstances and risk tolerance.”
Additionally, the company mentioned in its FAQ that Reddit users would have the ability to submit questions to be considered for inclusion on its quarterly earnings calls if it becomes a publicly traded company. Normally, Wall Street analysts linked with institutional investment companies are the only ones who have access to this chance.
