Last month, Reddit gave 75,000 power users first dibs on stock before the corporate goes public later this 12 months.
Though Reddit could have pitched the move as a “special program,” popular opinions throughout the Reddit community show that reception has been mixed.
“I got requested to join the IPO, and I ain’t taking that risk,” one Reddit user posted. “The user base is just not price investing in.” One other presented a contrasting opinion, mentioning that the Reddit community relies on Reddit results for quality answers while also disputing the standard of that content.
Related: Reddit Co-Founder Alexis Ohanian Says the ‘Surfer Mindset’ Is the ‘Right’ Approach in Business and Life.
Still, others have deemed Reddit a “meme stock” which is a term that paradoxically originated on the platform.
The 15 million members on the subreddit r/WallStreetBets have impacted the stock market before by manipulating low-performing stock or “meme stocks,” with GameStop being an example that cost institutions billions of dollars in losses.
Reddit just sent my reddit account a DM asking me to buy stock of their IPO
The meme-est of the meme stocks has arrived pic.twitter.com/lXdM6Xl210
— Jeremiah Johnson ? (@JeremiahDJohns) February 22, 2024
Some investors consider Reddit a superb bet, though.
“I would like to put money into a search engine in any case because I believe it’s a superb investment to have,” Gillian Tahajian, a 24-year-old marketing analyst, told TechCrunch. “Google is overpriced, and Pinterest is failing me.”
The deadline to preregister for Reddit stock arrives this week for the 75,000 users that Reddit selected to invite. According to Reddit’s S-1 filing with the SEC, which the corporate filed to prepare for its initial public offering, Redditors who contributed substantially to the community received preference for preregistration. Reddit considered a user’s “karma points,” which measure how much their actions contribute to the Reddit community, and moderator actions to make its picks.
Related: Spirit Airlines Is the Latest Meme Stock Amid 131% Spike
Reddit, which calls itself “the front page of the Web,” was founded by Alexis Ohanian, Aaron Swartz, and Steve Huffman in 2005. The platform gives posting and community moderation power over to users, who’re instrumental enough to the platform’s success that they were able to make the web site nonfunctional last 12 months in response to administrative changes.
Reddit may very well be in search of a $6.5 billion valuation, according to a CNBC source.
Data from Semrush”s Traffic Analytics Tool reveals that Reddit was the third most visited website within the U.S. in December 2023, beating out Facebook by roughly 535 million views. Twitter, Instagram, and TikTok took tenth, thirteenth, and seventeenth place respectively. Globally, Reddit takes ninth place according to Semrush, which brings its traffic numbers above TikTok and WhatsApp, but below Facebook, Twitter, and Instagram.
Related: Netflix Documentary ‘Eat the Wealthy: The GameStop Saga’ Explains the Meme Stock Saga That Cost Wall Street $20 Billion
Reddit’s SEC filing discloses that the corporate had 267.5 million energetic users per week, greater than 100,000 energetic communities, and a complete post count of 1 billion. The corporate was unprofitable last 12 months, with a net lack of $90.8 million, but plans to turn into profitable through “promoting, monetizing commerce on the platform, and licensing data,” according to the filing.
The filing further shows that Reddit currently generates 98% of its revenue through promoting.
Reddit struck a $60 million deal with Google in February that permits the corporate to train its AI models on Reddit posts.