Here’s how Reddit users can participate in the company’s IPO

Reddit plans to take the unusual step of giving certain users the chance to become shareholders when it makes its initial public offering this year. The social media company announced the plan in its IPO filing last week and is now sharing more details about how users can become one of its, in Reddit’s own words, “(non-corporate) overlords.” Reddit has begun sending emails to select users informing them of the opportunity to participate and has also published a “frequently asked questions” page for curious Redditors. The opportunity to buy shares in an IPO is typically reserved mainly for institutional investors, so Reddit will be able to invite only a select number of users to participate in what’s called a “direct share program.” Starting last week, Reddit said it began sending invitations to users to participate in the IPO based on one of two measurements of engagement on the site: either the number of actions they’ve taken as a moderator of a forum on the platform (also known as a “subreddit”) or their “karma” score, a figure that indicates a user’s contributions and reputation among other users on the site. Redditors who don’t receive one of those invitation emails will be able to pre-register to buy shares in the IPO between March 1 and March 5. If capacity in the program is filled before March 5, Reddit will open a waitlist for the program. The IPO direct share program will be open to adult US Reddit users with accounts created on or before January 1, 2024, who are not current or former Reddit employees. “The invite-only phase gives our ride-or-dies first dibs on pre-registering, while the open pre-registration phase is for all Redditors,” the company said on its FAQ page. Sometime after registration closes on March 5, the company will send an email to users who have been confirmed to participate in the direct share program to provide further instructions. Reddit has not yet set the price at which shares will be listed in its IPO. Users will be able to opt out of purchasing shares once they have been priced. Reddit is set to be the first major social media company to IPO in years. It filed to list on the New York Stock Exchange under the ticker symbol “RDDT,” according to last week’s Securities and Exchange Commission filing. The company said in the filing that it has not posted a profit in its nearly 20-year history, although its losses appear to be narrowing. Reddit reported a net loss of $90.8 million in 2023, an improvement from the $158.6 million loss it netted in 2022. The company’s sales in 2023 reached $804 million, up 21% from $666.7 million in 2022. Reddit also said it averaged more than 73 million daily active users in the final three months of 2023, up from the 52 million daily active users it reported in 2021. While somewhat unusual, offering users the opportunity to invest in its IPO makes sense for Reddit, a platform with a community of users famously — some might say infamously — interested in investing. In 2021, Reddit caused mass market upheaval when a community of day traders on the platform called WallStreetBets began buying shares of GameStop in an effort to hurt hedge funds betting against the stock. Many of the Redditors who joined the frenzy late ended up with huge losses, but the incident drew attention to the power of both Reddit communities and individual investors. “As with any investment opportunity, you should make an individual decision based on your own personal circumstances and risk tolerance,” Reddit said in an email inviting eligible users to participate in the IPO. The company also noted in its FAQ that once it’s a publicly traded company, Reddit users will be able to submit questions to be considered for inclusion on its quarterly earnings calls, an opportunity also typically reserved for Wall Street analysts affiliated with institutional investment firms.