Here's how Reddit is Going to Reward Thousands of Loyal Users Ahead of its Much-Hyped IPO
Reddit has been a major platform for people with similar interests to come together and discuss everything from global politics to economics, pop culture, and even conspiracy theories. In the past, Redditors even managed to shake up Wall Street when they decided to take on short sellers by triggering a rally in GameStop's stock prices. Now thousands of loyal Redditors are set to reap the rewards for contributions to the platform, as they will get a chance to purchase a significant portion of Reddit's Stock in advance, before the company launches an IPO. This will enable them to earn high returns on investment when the stock prices surge after the public listing.
Reddit's much-awaited IPO
After the latest funding round held in 2021, Reddit had been valued at $10 billion, and the only way for the company to now move ahead with its expansion plan was to go for an IPO. Reddit saw very strong trends in the number of active users on the platform post the launch of WallStreetBets, a subreddit that saw millions of new users joining the platform. The company had announced its plans to go public in December 2021, and since then, investors have been eyeing the first IPO by a social media company post the IPO of Pinterest which occurred in 2019. Reddit currently has 70 million users across the globe which are part of more than 100,000 communities on the portal.
What does the market look like for Reddit’s IPO?
All the selected 75,000 Redditors might not buy stocks set aside for them, as they are still evaluating the company’s long-term vision. Earlier in June 2023, Reddit decided to charge third-party apps for accessing its API, something that was completely free before. The decision was met with harsh criticism from the Redditors themselves, with several subreddits even going dark for a couple of days to protest against it. The news did impact the company’s revenue but internally Reddit claimed that they were completely unaffected. The company then replaced the old community moderators with new ones since they had been part of the protest, thus breaking the trust of its dedicated forum members. All this has led for the Redditors to believe that the company no longer works for its users at the core and is not supporting the third-party applications that led to the growth of social media.
According to an article published in June 2023 by Forbes, Reddit isn’t profitable and that’s something that is going to impact the decision of the retail investors. Analyst Peter Cohan was quoted as saying “I would not buy Reddit stock on the day of the IPO since the price will be engineered by underwriters to rise significantly on the first day of trading,”. Instead, he advised investors to wait until after Reddit reports its first quarterly earnings as a public company. But with investors and financial experts closely monitoring how things will unfold for the company in the near future, Reddit's IPO promises to be one of the most significant developments in the stock market for the year to come.
