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Reddit Offered 75,000 Users the Chance to Preregister for Shares Before Its IPO. The Reactions Were Pure Reddit. Some users have deemed Reddit a "meme stock," a term that ironically originated on the platform.

By Sherin Shibu

Key Takeaways

  • This week is the deadline for Reddit's top posters and moderators to preregister for the chance to buy shares in the company's upcoming initial public offering.
  • The reaction on the platform has been skeptical.
  • Data from Semrush''s Traffic Analytics Tool reveals that Reddit was the third most visited website in the U.S. in December 2023, beating out Facebook by roughly 535 million views.
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Last month, Reddit gave 75,000 power users first dibs on stock before the company goes public later this year.

Though Reddit may have pitched the move as a "special program," popular opinions within the Reddit community show that reception has been mixed.

"I got requested to join the IPO, and I ain't taking that risk," one Reddit user posted. "The user base is not worth investing in." Another presented a contrasting opinion, pointing out that the Reddit community relies on Reddit results for quality answers while also disputing the quality of that content.

Related: Reddit Co-Founder Alexis Ohanian Says the 'Surfer Mindset' Is the 'Right' Approach in Business and Life.

Still, others have deemed Reddit a "meme stock" which is a term that ironically originated on the platform.

The 15 million members on the subreddit r/WallStreetBets have impacted the stock market before by manipulating low-performing stock or "meme stocks," with GameStop being an example that cost institutions billions of dollars in losses.

Some investors consider Reddit a good bet, though.

"I want to invest in a search engine anyways because I think it's a good investment to have," Gillian Tahajian, a 24-year-old marketing analyst, told TechCrunch. "Google is overpriced, and Pinterest is failing me."

The deadline to preregister for Reddit stock arrives this week for the 75,000 users that Reddit chose to invite. According to Reddit's S-1 filing with the SEC, which the company filed to prepare for its initial public offering, Redditors who contributed substantially to the community received preference for preregistration. Reddit considered a user's "karma points," which measure how much their actions contribute to the Reddit community, and moderator actions to make its picks.

Related: Spirit Airlines Is the Latest Meme Stock Amid 131% Spike

Reddit, which calls itself "the front page of the Internet," was founded by Alexis Ohanian, Aaron Swartz, and Steve Huffman in 2005. The platform gives posting and community moderation power over to users, who are instrumental enough to the platform's success that they were able to make the website nonfunctional last year in response to administrative changes.

Reddit could be seeking a $6.5 billion valuation, according to a CNBC source.

Data from Semrush''s Traffic Analytics Tool reveals that Reddit was the third most visited website in the U.S. in December 2023, beating out Facebook by roughly 535 million views. Twitter, Instagram, and TikTok took 10th, 13th, and 17th place respectively. Globally, Reddit takes 9th place according to Semrush, which brings its traffic numbers above TikTok and WhatsApp, but below Facebook, Twitter, and Instagram.

Related: Netflix Documentary 'Eat the Rich: The GameStop Saga' Explains the Meme Stock Saga That Cost Wall Street $20 Billion

Reddit's SEC filing discloses that the company had 267.5 million active users per week, more than 100,000 active communities, and a total post count of 1 billion. The company was unprofitable last year, with a net loss of $90.8 million, but plans to become profitable through "advertising, monetizing commerce on the platform, and licensing data," according to the filing.

The filing further shows that Reddit currently generates 98% of its revenue through advertising.

Reddit struck a $60 million deal with Google in February that allows the company to train its AI models on Reddit posts.

Sherin Shibu

Entrepreneur Staff

News Reporter

Sherin Shibu is a business news reporter at Entrepreneur.com. She previously worked for PCMag, Business Insider, The Messenger, and ZDNET as a reporter and copyeditor. Her areas of coverage encompass tech, business, strategy, finance, and even space. She is a Columbia University graduate.

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