Reddit’s upcoming IPO is generating buzz not only because the company remains unprofitable but also due to its unique approach to involving its active user community in the public markets debut. In a recent SEC filing, Reddit disclosed plans to sell around 22 million shares priced between $31 to $34. What sets this IPO apart is Reddit’s decision to allow its community members to sell their shares immediately, bypassing the typical lock-up agreements that restrict share sales post-IPO. This move could potentially lead to significant volatility in the stock price as Redditors have the opportunity to collectively influence the market.
Reports indicate that Reddit aims to raise up to $748 million with a valuation close to $6.5 billion, with the company selling 15 million shares to secure funds. By offering shares to its community members, Reddit is setting the stage for the stock to become a “meme stock,” reminiscent of the GameStop short squeeze driven by Reddit users on r/WallStreetBets in 2021. This strategy could either work in Reddit’s favor or pose risks, as highlighted in the company’s IPO filing which lists r/WallStreetBets as a potential market volatility trigger. Reddit’s IPO could be a turning point for the platform, leveraging user participation in a novel way within the realm of public markets.
The concept of Reddit turning into a meme stock through user involvement in its IPO introduces a new dimension to traditional market dynamics. By inviting its community to partake in the IPO, Reddit opens the door for potential manipulation or collective action that could impact the stock price. This strategy not only aligns with Reddit’s community-centric ethos but also marks a departure from conventional IPO practices, indicating a shift towards more inclusive and unconventional market approaches. As Reddit prepares to debut on the NYSE under the symbol “RDDT,” all eyes are on how this innovative IPO model will unfold and potentially reshape the landscape of public offerings.
