Reddit is seemingly leaning further into its community of users as it closes in on its public offering. The Wall Street Journal reports that the social media site plans to reserve an undetermined number of its IPO shares for its most active users when it IPOs next month. While the number is not yet set, the Journal said it is “a big chunk” of the offering.
Some 75,000 power-users of the site will reportedly be able to buy shares at the IPO price, a privilege that’s normally reserved for the top investors in a company. That could, ultimately, net the users thousands or even millions of dollars, depending on how many shares they buy and the stock’s performance.
Reddit declined to comment on the report.
If true, it’s a move that could either further endear Reddit users to the site or could backfire in grandiose style. Should the stock soar, users are unlikely to grumble. But if Reddit shares fail to find traction, whether out of the gate or over the long term, the core users who invested in the company could become vocal critics.
And when Reddit users get upset, they have a history of expressing it loudly. Last June, when Reddit began charging app developers to access its data, over 8,400 subreddits went dark in protest, and users boycotted the site. The revolt was short-lived, and while it did draw negative publicity to the site, CEO Steve Huffman, who many thought would be forced to step down at the start of the protests, emerged more powerful than ever.
Huffman has long been a proponent of incorporating users into the IPO process. In October 2021, speaking at the Wall Street Journal’s Tech Live conference, he said, “I want our users to be shareholders, and I want our shareholders to be users.”
Reddit is also home to r/WallStreetBets, the community that helped push meme stocks to record highs (remember GameStop?) as users held the stock even as it soared—and even as its earnings continued to fall short of expectations. (Shares of that company are still trading more than twelve-fold higher than they were at the start of the run-up.)
Reddit has been one of the leading IPO candidates for over two years now but has remained on the sidelines as the market has been largely inhospitable to public debuts. 2022 was the worst year in a decade for IPOs, and 2023 was only slightly better.
Initially, Reddit filed for an IPO in December 2021, listing a valuation of up to $15 billion, and was expected to go public in March 2022—but then the market chop began, causing the company to shelve its plans. Last November, it began holding talks again with potential investors, reportedly considering a valuation of $5 billion.
It’s expected to make its paperwork public later this month, according to the Journal, with shares being listed in March. It is not thought to be profitable at this time.
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