Reddit takes a huge risk betting on its most loyal users

Reddit is going public next month — and it’s making an unusual move to reward some of its most active and loyal users.

The community board-style social media website will be holding a big chunk of its shares to distribute to 75,000 of its users, according to a report by The Wall Street Journal. The users will reportedly be able to buy shares of the company at its IPO-price before the stock begins trading.

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The move is peculiar as the ability to buy reserved stock is often saved for big time investors as retail investors don’t have as big of a safety net and have more incentive off the stock quicker. But Reddit is a fairly peculiar platform itself, as some may recall how users came together to support the r/WallStreetBets redditors that triggered the Game Stop short in 2021.

Reddit’s valuation is has fluctuated over the last few years, as it was valued at $10 billion in 2021, but has reached highs of $15 billion as well as valuations below $5 billion from others. It’s looking to sell about 10% of its shares in an IPO, according to a report by Reuters.

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The social media company had originally filed for an IPO in 2021 and was expected to go public in Q4 2021, but pushed back the move given the volatility in the market.

The company founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian is the first social media company to go public since Pinterest in 2019, which is up about 45% in the last five years.

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