Reddit IPO: Everything you need to know about trading Reddit

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By :  ,  Financial Writer

Reddit IPO to raise $748 million

Reddit is set to go public on the NYSE on Thursday, March 21 under the ticker symbol “RDDT.” The IPO marks the first major tech offering of the year, with investors and analysts eager to see how the stock will perform.   

The company is notably oversubscribed, meaning there are more interested buyers than shares available. As a result, the social media website has priced its shares at $34 apiece, the top of its anticipated price range of $31 to $34.

With that share price, the company is set to raise $748 million and be valued at more than $6.4 billion.

Reddit first filed for an IPO in December 2021, but the event was delayed due to prolonged market volatility resulting from numerous factors including geopolitical conflicts, soaring inflation and rising interest rates.

All eyes are on Reddit to see how the stock performs and whether it can continue the momentum initially drummed up in the IPO market last fall with the successful debut of tech companies like Instacart and ARM.

Reddit has set aside 8% of shares in the offering for a direct share program, eligible for certain members of the Reddit community including top users, moderators and company insiders.  

 See other upcoming IPOs

What do Reddit users think about the Reddit IPO?

Reddit users on the forum r/WallStreetBets have already vocalised their concerns about the move to take the firm public. The main criticism seems to be that as a listed company, Reddit will need to start generating more income to please shareholders, which could result in users seeing more advertising and modifications to the experience.

How much is Reddit worth?

Reddit is expected to be worth $6.4 billion after the sale of 22 million shares at $34 a share. The company was last valued at $10 billion in August 2021, and it had set a valuation goal as high as $15 billion after initially filing in 2021.

However, many IPO valuations have lowered significantly over the last two years given market conditions, so the drop in expectations reflects changes in the market more so than Reddit’s performance as a company.

How to trade Reddit shares

You can trade shares of Reddit and thousands of other global stocks with in a few quick steps:

  1. Open a account, or log in if you’re already a customer
  2. Select Reddit via the ticker symbol “RDDT” on our award-winning trading platforms
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

Alternatively, if you’re not ready to trade live markets – but want to practise trading stocks like Reddit – you can set up a free demo account to trade in a no-risk environment. 

Open a demo account now.

What does Reddit do?

Reddit is an online discussion board and community, founded in 2005 by Steve Huffman and late activist Aaron Swartz. Despite not being as popular as other social media firms such as Facebook, Instagram and Twitter, Reddit has made its name with niche—and often controversial—discussion groups.

Reddit has more than 100,000 communities, in which over 73 million active daily users share their thoughts and ideas on a range of topics. In fact, Reddit is currently the 16th-most-visited website on the internet and the seventh-most-popular social networking site.

The site allows users to post anonymously, which is supposed to encourage honesty and transparency. Any post can be voted on by the community; posts with the largest number of upvotes are viewed more and hold greater authority.

Most recently, Reddit has become a hub of retail investors, flocking to the board r/WallStreetBets to discuss tips and ideas on stock trading. The community – known as a subreddit – was responsible for the rise of GameStop and other so-called ‘meme stocks’. Their intentions were to profit as hedge funds covered their short positions, in what’s known as a short squeeze.

Find out more about the Reddit stocks to watch

How does Reddit make money?

Reddit makes its money through advertising on its site. Advertisers have the option of paying a minimum of $50,000 per quarter for a large-scale campaign or bidding on a click per thousand impressions model (CPM).

For users who don’t want ads on their feeds, there is a ‘premium membership’ available, which grants an ad-free experience. The membership costs $5.99 per month or $49.99 per year.

Reddit is also developing a data licensing business, selling data accrued from its users’ discussions and activities across the site to hedge funds and other financial institutions which use the data to track investor sentiment.

The company has also made deals with Google and other tech companies to use its vast repository of conversations to train large language models (LLMs)—AI software like ChatGPT and Google’s Gemini capable of sustaining human-like conversations. Reddit has stated it plans to receive about $66 million through such deals in 2024.

Reddit has also raised capital through 10 rounds of fundraising, generating a total of $1.3 bn.

Is Reddit profitable?

No, Reddit isn’t profitable. However, the company has been substantially growing revenue in the past few years. Reddit’s total revenue in 2023 was $804 million, up 21% from $666 million in 2022. Reddit’s net loss for 2023 narrowed to $90.8 million.

Learn how to read a company's earnings report

What is Reddit's business strategy?

Reddit’s business strategy thus far is a pretty odd one, given that the firm sacrifices the opportunity to make money to keep its users happy. As we’ve seen, advertising space sales are the company’s primary revenue stream. However, Reddit does not require email addresses and does not track personal information, losing out on the opportunity to increase advertising through data exploitation, to keep its more than 73 million daily average users anonymous.

This brings up one of the biggest challenges Reddit could face: regulation. Due to the anonymity of users, there’s always the possibility of malpractice and manipulation, such as bots or even hedge funds driving users toward certain stocks. Reddit does already have moderators in place, but once it’s a public firm the level of scrutiny it’ll face will likely increase. Any threat to the anonymity of users could cause an exodus from the platform.

Reddit is also handling scrutiny from the Federal Trade Commission, which is conducting an inquiry into the company’s recent sale of its user-generated content to train LLMs.

Who owns Reddit?

Reddit is owned by Condé Nast Publications, a global media company, who bought the company from founders Huffman and Ohanian one year after it was created for $10 to $20 million.

Board of Directors of Reddit

Reddit’s board of directors includes:

  • Steve Huffman
  • Dave Habiger
  • Patricia Fili-Krushel
  • Porter Gale
  • Michael Seibel
  • Steven O. Newhouse
  • Bob Sauerberg

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