Down Angle Symbol A symbol in the form of an angle pointing downwards. Reddit's power users could be among the first to buy the company's shares. SOPA Images / Contributor / Getty Images
- Some Reddit users could be among the first to buy the company's shares in next month's IPO.
- The so-called “Redditors” would join the asset managers and buy shares at the opening price.
- It's an unusual strategy, but one stock trading app Robinhood tried out in 2021.
Reddit's most frequent users could move from posting comments to posting earnings – or losses – if the company goes public.
About 75,000 of the company's largest users will have the opportunity to buy the company's shares at the IPO price in March before trading begins, the Wall Street Journal reported Wednesday. According to the Journal, the exact number of shares available to these power posters is not known.
Giving Reddit users, so-called “Redditors,” such preferential treatment in the IPO is unusual. When companies first offer stocks, they typically sell them to mutual funds and other groups worth millions or billions, not to individuals.
However, the approach has been tried before. Trading app Robinhood offered stocks to some of its users when it went public in 2021. Retail investors like users tend to sell their stocks faster than money managers, and Robinhood's first day of trading was more volatile in part because of the strategy, Journal reported.
The IPO market remains tough, even for companies with a more conventional strategy. Despite hopes of a comeback, few tech companies went public in 2023. And some that did, like Instacart and Klaviyo, ended up trading well below their IPO share price.
In January, Bloomberg reported that Reddit was seeking a $5 billion valuation for its IPO – half of what the company could have been valued at in a stock sale three years ago.
Reddit did not immediately respond to a request from Business Insider for comment on the Journal's report.
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