Loyal Reddit users could win big from its IPO

by MMC
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Some 75,000 of the company’s largest users will have the opportunity to buy its shares at the IPO price in March before trading begins, according to the Wall Street Journal. reported Wednesday. The exact number of shares that will be available to these power posters was not known, according to the Journal.

Giving Reddit users, called “Redditors,” such preferential treatment in the IPO is unusual. When companies first offer shares, they typically sell them to investment funds and other groups with millions or billions to lose, not to individuals.

The approach has, however, already been tried. Trading app Robinhood offered shares to some of its users when it went public in 2021. Small investors like users tend to sell their shares more quickly than money managers, and Robinhood’s first day of trading was more volatile in part because of the strategy, a reported the Journal.

The IPO market remains challenging, even for companies with a more conventional strategy. Little tech companies went public in 2023 despite hopes of a return. And some did, like Instacart and Klaviyo, ended up trading well below their IPO stock price.

Reddit did not immediately respond to a request for comment from Business Insider on the Journal’s report.

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