Reddit is taking an unconventional approach to its upcoming IPO, offering some of its most active users the chance to buy shares before they start trading. This move could see loyal “Redditors” join Wall Street money managers in acquiring the company’s stock at its initial price.
Key Points:
- 75,000 active users will have the opportunity to purchase shares at the IPO price in March.
- This strategy is unusual in the IPO world, typically reserved for large investors.
- Similar approach used by Robinhood in 2021 resulted in higher volatility on its first trading day.
- Reddit’s IPO comes amidst a challenging market for tech companies.
- The company is targeting a $5 billion valuation, lower than previous estimates.
Potential Implications:
This move could benefit both Reddit and its dedicated users. Redditors gain the chance to potentially profit from the IPO, while the company fosters loyalty and potentially generates positive publicity. However, concerns remain about market volatility and potential losses for individual investors.
LinkedIn Sounds Off
When the news spread and started trending on LinkedIn, users had something to say about it.
“Reddit plans to give its most prolific “Redditors” the chance to buy stock in its upcoming IPO. That privilege is usually reserved for big institutional investors such as mutual funds and hedge funds,” said Cara Lombardo, Deputy Wall Street Bureau Chief at The Wall Street Journal.
“This is so reddit: power to the people – give the most active redditors the option to own a part of the communities they create and run early. Naturally, this will come with a healthy amount of snark (as is the way), but creative & thoughtful nonetheless,” said Alexandra Riccomini, Senior Director, BD @ LinkedIn.
“Fascinating move from Reddit: User loyalty perks meet equity compensation with pre-IPO shares available to users,” said Mary Russell, Attorney Counsel to Individuals.
When will the Reddit IPO be Available?
It hasn’t been announced yet but it is speculated that the Reddit IPO will become available in March 2024.
Overall, Reddit’s decision to offer early access to its IPO for select users is a bold strategy that could have significant implications for both the company and its engaged community.
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