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  • Reddit Is Letting Power Users In on Its IPO. Not Everyone’s Buying

    Reddit Is Letting Power Users In on Its IPO. Not Everyone’s Buying

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    Reddit didn’t immediately respond to a request for comment for this story.

    Unwanted Offer

    Reddit’s investment offer to users is known as the Directed Share Program. “Because you have helped make Reddit what it is today, you now have the opportunity to become Reddit owners at the same price as institutional investors,” the company wrote to the first batch of invitees, both in emails and direct messages through Reddit.

    The program allows users to buy shares the day before shares in the company begin trading, at a price to be set by Reddit’s bankers. If the start of public trading attracts a frenzy of interest, shares bought on the eve of trading can immediately rocket in value. Users won’t face any restrictions on selling the shares.

    Such IPO buy-ins are typically reserved mostly for huge investors, such as retirement funds and ETF issuers, that tend to hold shares for a long time. Involving individual investors in an IPO can lead to unpredictable swings in pricing, since individuals may sell their shares sooner.

    Companies such as Facebook and Robinhood suffered share price shocks after giving individuals an unusually high number of shares—about a quarter to a third of those in the IPO. Airbnb, which set aside about 7 percent of its IPO shares for hosts on the housing rentals marketplace, faced fewer issues.

    Reddit hasn’t announced how many shares it will allocate users, but it will be a limited number. First dibs go to significant contributors as measured by joining company advisory boards or having high karma, a secretly determined grade of someone’s behavior on Reddit. The first tier also includes some of the busiest moderators, who create discussion forums and enforce the rules for contributing to them.

    Additional waves of users with successively lower levels of contributions will be invited in the coming days. Everyone has until March 5 to register their interest in buying shares, but nobody is obligated to follow through with a purchase. Starting March 1, any user can try to sign up regardless of activity or moderating history, though some may end up on a waitlist.

    To be eligible for the program, users must be at least 18 years old and must reside in the US. These restrictions left some teenaged mods, and those located in several other countries, feeling miffed. “Redditors based outside of the US are an equally important part of making Reddit what it is today,” the company wrote in FAQs on its website, citing unspecified regulations for the geographic limitation. “Unfortunately, this one is out of our hands.”

    Cook, the gaming mod, who is based in the UK, says international availability of the shares wouldn’t have persuaded him to buy in—but adds that Reddit’s inability to find a workaround or strive for fairness “doesn’t instill confidence.”

    Former Reddit employees who had been involved in IPO preparations say resentment from overseas moderators had long been identified as a pitfall of the plan. Staff also told executives they think many moderators would fear buying in, worrying it would taint their volunteer work or invite the wrath of their community members for appearing to sell out. But Cook framed it differently: He said stock simply isn’t the payoff volunteers are after. “A moderator’s ‘reward’ is making the community they’re in better for everyone,” he says.

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  • Reddit’s IPO Filing Is Missing Something: Cofounder Alexis Ohanian

    Reddit’s IPO Filing Is Missing Something: Cofounder Alexis Ohanian

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    Reddit cofounders Steve Huffman and Alexis Ohanian spent about eight straight years living together, initially as college room mates, playing World of Warcraft late into the night and later working together on the foundations of the discussion forums service now frequented by nearly 270 million people. But that history was missing from Reddit’s sales pitch to investors published Thursday announcing its plans to go public on the New York Stock Exchange: Reddit’s filing with the US Securities and Exchange Commission didn’t mention Ohanian at all.

    Huffman, who has been Reddit’s CEO since 2015, and Ohanian, who after stepping back from helping run the business had sat on its board for years, split in 2020 over how to handle some of the hateful content on Reddit. They’ve spoken little since. The lack of nod to Ohanian in the new document could reflect both that schism and Huffman’s attempt to cast a company that’s been around for 19 years in a new light.

    Disputes among startup cofounders are common and not every investor pitch recounts the minutiae of a company’s history. But the gregarious Ohanian had been the public face of Reddit during its formative years and to early users was a kind of spiritual leader who shaped the community’s culture while Huffman worked on the code. Some users still closely associate Reddit with Ohanian and long for his involvement. But Huffman has held the reins in more recent history and has led work on developing potential paths to consistent profits that he and Ohanian never could envision in the early days.

    The new sales pitch filed with the SEC, known as a Form S-1, allows Reddit to debut on the stock market with the ticker symbol RDDT as soon as next month.

    Reddit and Ohanian didn’t immediately respond to requests for comment. In a post on X Thursday, Ohanian, who now runs venture capital firm SevenSevenSix wrote, “Pretty wild seeing $RDDT going public after all these years. Founders, keep going.”

    In the S-1, Huffman offers a brief look at Reddit’s beginnings, without naming his cofounder. “I think of August 13, 2005 as the day Reddit really came to life,” Huffman says. “We had been online for a couple of months, but until then there had never been enough posts from users on any day to fill the front page. That morning, to my surprise, I opened Reddit to discover the home page was overflowing with posts from real users for the first time.”

    The filing also lists the number of Reddit shares owned by executives or people who individually own more than a 5 percent stake in the company. Ohanian isn’t listed because he and Huffman sold Reddit to Condé Nast (WIRED’s parent company) for about $10 million in 2006, a little over a year after founding it, relinquishing their ownership. They both left the company altogether in 2009.

    Since returning to become CEO, Huffman has accumulated shares totaling 3.3 percent of Reddit, according to the S-1. ​​Ohanian said in a separate X post on Thursday he said he still has some shares from when he was executive chair of Reddit about a decade ago.



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