Reddit (RDDT) is about to go public in one of the most anticipated initial public offerings (IPOs) of 2024. The social media company, led by CEO Steve Huffman, is seeking a valuation of $6.5 billion. The company plans to raise up to $748 million through a public offering.
planned for March 21The offering is imminent, with Reddit saying last week that it would sell 22 million shares at an expected price of $32.50 per share helped reach the aforementioned $748 million. Approximately 1.76 million shares have been sequestered to Reddit users, meaning they will have the opportunity to purchase individual shares at the initial offering price and be able to sell them immediately upon the IPO. For early investors after a stock debuts, a mandatory six-month holding period is typical.
Reddit finally files for IPO, giving Reddit users first dibs on buying shares
These individual shares are primarily for holders of Reddit accounts created before January 1, 2024, so if you’re new to Reddit, you won’t be able to participate. According to Yahoo Finance, the offer to buy shares was made available to select users, moderators and then “friends and family members of board members and employees.”
Some users received invitations to the IPO back in February, with participants selected based on their level of activity as forum moderators on the platform, or their “karma” scores, which reflect the perceived value of user contributions. and serves as a shorthand indicator for an IPO. An individual’s status in the community. Reddit users who did not receive an invitation have the opportunity to register in advance to purchase IPO shares from March 1 to March 5. If the program reaches its capacity before March 5, Reddit will activate a waiting list.
Reddit’s IPO launch has been underway since the company first filed confidentially in 2021. Not surprisingly, Reddit users hated the move. Most heavy users seem to agree that Reddit is trying to further monetize a platform that hasn’t been profitable in 20 years and that the site has suffered. The most notable of these are the 2023 terms of service changes, specifically its API, which forced the developers of the very popular third-party Reddit app to shut them down. Then there’s a $60 million content licensing deal with Google that allows its artificial intelligence to be trained on website data. Additionally, Reddit has removed the option for users to opt out of personalized ads.
The relationship between Reddit and its freelance volunteer moderators is already on rocky ground, especially after many people were removed from the subreddit for protesting the company’s API changes. Therefore, Reddit allowing moderators to participate in the IPO early could be considered an attempt to “compensate” those who feel slighted.
However, many users were not very enthusiastic about buying stocks. The user wrote: “After decades of being one of the most popular websites in the world, they have failed to turn a profit and now their only way to make money is by selling access to previously unprofitable spam posts to crawlers who will The AI it feeds them.” DPSnacks on the r/investing Subreddit.