BY ANDREW R. CHOW
GOOD QUESTION
REDDIT USERS CAN MOVE MARKETS. Three years ago, members of the finance-focused subreddit r/WallStreetBets, one of the platform’s biggest communities, banded together to push GameStop’s stock price upward in unprecedented ways. Now Reddit itself is hoping to tap into its users’ unruly energy by allowing them to participate in the company’s IPO. Reddit filed to go public on Feb. 22, seeking a valuation of at least $5 billion. Crucially, the company said it would set aside a large number of shares for 75,000 of the company’s most prolific users, who might be able to profit off the company’s financial success.
But rather than galvanizing the community, the news was met with fierce backlash and pessimism from many Redditors, who cast doubt on the company’s business model, complained about recent changes to the site, and ironically threatened to wield their collective power to bet against the company’s stock. The overwhelming negativity from Reddit’s own community illuminates a fundamental problem with social media, where business models are often at odds with the people platforms ostensibly serve.
REDDIT IS ONEof the most visited websites in the U.S., with 73.1 million daily active users. But the company is still unprofitable: while it grew 21% in revenue last year, it also lost more than $90 million. Compared with Instagram, X, and other social media platforms, Reddit has especially struggled to monetize its audience through ads, partly because its content is generally more freewheeling and untamed than that of its counterparts.
Reddit is powered by users who post content and moderate the site mostly for free. And while Redditors tend to be intensely devoted to their subreddits—the subject-specific forums that make up the platform—many have grown increasingly disillusioned with the platform overall. Last summer, hundreds of Reddit communities engaged in a widespread blackout to protest price changes for third-party app developers.
When Reddit goes public—likely in the next couple of months—it will be the first major tech IPO of 2024, and the first social media IPO since Pinterest’s in 2019. Very few companies have taken this route recently, because of a turbulent stock market and high interest rates.
As Reddit woos traditional high-profile investors, it also established a Directed Shares Program, which lets the most active Redditors buy into the IPO early. But the announcement did not have the intended effec
