How Reddit Is Letting Users Participate in Its IPO

Reddit has never been a conventional social-media company. It’s latest unusual step: Announcing its plan to let its registered users and moderators buy shares as the company goes public.

In its IPO filing last week, Reddit declared its intent to let any anonymous user, as it wrote on its site, “become one of our (non-corporate) overlords.” (Really, they are being invited to participate in what’s known as a directed share program as part of the company’s public offering of stock, which seems likely to happen later in March.)

On February 22, the company began sending invitations to moderators of subreddits and users based on three tiers of activity. Moderators are given priority based on how many “mod actions,” or tasks related to managing a site on Reddit, they’ve completed. Users are prioritized based on their karma, a unique-to-Reddit system that corresponds to a user’s post volume and upvotes. Karma has never had a tangible value (though, intangibly, some view it as internet cred).

Redditors without priority status, but who had created accounts before January 1, 2024, can pre-register to purchase shares in the company’s offering beginning March 1. Once capacity fills, Reddit says it will open a waitlist, and close registration on March 5.

Readers of Reddit’s popular technology subreddit who implied on the site that they’d already received the offers expressed skepticism of both the offer and the status. “The fact that I’m a Reddit ‘power user’ brings me no small sense of shame,” wrote user Another_Road. Thoomfish wrote: “I passed because it smells of desperation.” Roughly half of all Redditors don’t live in the United States, according to the company’s Securities and Exchange Commission S-1 filing, and will therefore also have to pass.

Reddit was founded in 2005 by CEO Steve Huffman, along with Alexis Ohanian, his college roommate at the University of Virginia. Ohanian is a venture capitalist who left the company in 2020. Reddit has never posted an annual profit, though its net losses narrowed from $158.6 million in 2022 to $90.8 million in 2023.

Users are registering to purchase shares of the company at their initial listing price, which Reddit has not yet set. The company says they can opt-out after pre-registering, and will be sent more information after March 5. The company’s ticker symbol will be RDDT.