Reddit Readies for Life as a Public Company

For the conspiratorially minded who flock to the site, the rumor that Reddit was preparing to hold an initial public offering probably sounded like a classic false flag operation. Last week, however, the social media trailblazer confirmed the unthinkable: Reddit is going corporate. “Yes, it’s really happening this time,” the company wrote in an announcement of the move, marking the first social media IPO since 2019.

Reddit’s IPO filing released on February 22 pegged its value at a minimum of $5 billion, so it’s easy to understand the allure of selling out. Not surprisingly, the announcement gave off anti-establishment vibes that seemed anomalous in what tends to be a boilerplate exercise. A plan to reserve part of its equity for tens of thousands of its most dedicated Redditors was one of the more notable provisions, offering users the chance to become what the company dubbed “one of our (non-corporate) overlords.” Companies going public typically make such arrangements for wealthy investors and institutions.

If you think Reddit’s directed share program seems like letting the inmates run the asylum, you may not be far off. After all, Reddit provided the platform for its users to wreak havoc on trading markets during the meme stock craze of 2021. Retail investors conspired in Reddit’s Wall Street Bets channel, known as a subreddit, to inflate the stock prices of companies with sentimental value to hordes of armchair traders. In the process, companies struggling to stay afloat – like video game retailer GameStop – got needed cash infusions to bolster their financial positions. Meanwhile, short sellers who had bet against GameStop and companies of its ilk took a bath when the companies’ stock prices skyrocketed. (Netflix depicted the GameStop affair in the 2023 film “Dumb Money,” which stars Paul Dano and Seth Rogen.)

So, members of the Wall Street Bets crew will likely end up becoming some of Reddit’s earliest stockholders. And there will be no lockup period for those shares either, meaning Redditors won’t have to worry about restrictions on trading the stocks as they see fit.

It seems fitting that the tough crowd of Redditors is already trashing Reddit’s IPO plans. Responses on the company’s own site show some users have qualms with Reddit’s business operations and the product itself. Might we even see the organization of another meme stock imbroglio as a result?

The head honchos at Reddit clearly understand the threat that lies within their own community. In the S-1 filing with the Securities and Exchange Commission disclosing its IPO plans, Reddit even cited the machinations of Wall Street Bets as a risk factor for its investors. So, those considering buying into Reddit’s online circus, can’t say they weren’t warned.