- Reddit allocated 8% of shares in its eagerly awaited IPO to some of its biggest users.
- But users on the platform have voiced concerns and disinterest in the offering.
Reddit's invitation to users to participate in its initial public offering has been met with concern and outright dismissal across the platform.
Ahead of its IPO, Reddit allocated 8% of 22 million shares to specific power users and moderators. The company is targeting pricing of $31 to $34 per share, which would raise $748 million at the top range and value it at roughly $6.4 billion. It will trade under the ticker "RDDT" on the New York Stock Exchange.
Yet on various markets-focused subreddits including the hugely popular r/WallStreetBets and r/stocks, some users voiced doubts and disinterest in the IPO, and there was little optimism on display about the 20-year-old platform's trading outlook.
In response to a post asking if anyone was bullish on Reddit, a user with the screen name YeezyThoughtMe replied "Hell no."
"I'm going to throw in a few grand to buy shares then dump it after a day or two and get my money and then hold it until options," the user added. "Roll in then I'm going to short the crap out of it."
"Going IPO is 100% to extract any remaining value in the company and cash out," the user Icy_Rhubarb2857 said in response to a post that has roughly 5,100 upvotes. "This thing is going to zero. And they know we are all thinking that so they are going to pump it up on release to get fomos in and then run it into the ground."
Lack of faith from a dedicated user base
When the IPO market was sizzling in 2021, Reddit — which averaged over 73 million daily users last quarter — confidentially filed to go public. The market for IPOs froze over, however, as the following years saw Fed policy spark bouts of volatility that kept companies looking to go public on the sidelines.
IPOs like Arm and Instacart's splashy debuts did little to revive the slump in 2023, and the landscape remains tepid today. Bloomberg data shows IPOs in the US reached $26 billion in 2023, down from a record $339 billion in 2021.
Reddit is mirroring the playbook Airbnb, Robinhood, and others have used in their public debuts in promising some percentage of the stock to its users.
It seems many Redditors though have a lot of thoughts about the platform's offer to get them in on the deal.
"In all honesty, what growth potential does Reddit even have?" the user Galumpadump wrote. "It's majority english based forum website. They probably have the worst targeted ads for all the bug social media players. The only thing they probably have going is longer daily engagement from it's users due to it being a forum based website. They would need to implement significant features to make still a company that I would believe in investing in."
Meanwhile, others view the IPO as the latest move for its executives to line their pockets. CEO Steve Huffman caught flak earlier this week as he defended his $193 million compensation package. The company adjusted his pay incentives shortly before announcing its fresh IPO plans.
"Reddit about to break all records for speed running to a penny stock," the user ThinWhiteDooky said. The comment racked up more than 5,000 upvotes.
"LOL Reddit will only be profitable for the people who were in at the start," wrote the user Fluffy_Rock1735 in a 186-upvote response to a conversation on whether Reddit's current management could engineer a success. "This IPO will allow them to get out with bags of cash while dummies buy the stock hoping this sh-t hole becomes worth something. And spoiler alert, it isn't worth a penny."