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Reddit users were divided on whether they wanted to back the business\u2019s IPO\u2014but CEO Steve Huffman embraced the retail investors using the site to share their views\u2014even if it meant shorting the share price. <\/p>\n
Reddit\u2014an online network where users independently establish and grow communities based on topics or interests\u2014debuted on the New York Stock Exchange<\/a> this week initially priced at $34 a share<\/a>. <\/p>\n By close of trading on Thursday shares had popped<\/a> 48% to\u00a0$50.44, valuing the firm at more than $9 billion.<\/p>\n But earlier in the year the business confirmed a portion of its shares<\/a> were being made available to some of its most loyal users before the general public. <\/p>\n In an S-1 form<\/a> filed in February, the business added this decision could lead to stock volatility. <\/p>\n The filing even named one of its own communities\u2014a subreddit called r\/\u00a0wallstreetbets\u2014as a risk to the IPO given the forum\u2019s \u201cstrong and atypical retail investor interest\u201d in so-called \u2018meme stocks\u2019 like GameStop<\/a> and AMC which experienced massive fluctuations.<\/p>\n But in an interview with CNBC<\/a> yesterday, Huffman insisted he welcomed conversation among users, whether positive or negative. <\/p>\n \u201cFirst of all, I love wallstreetbets,\u201d Huffman said. \u201cI\u2019m a user, I\u2019ve seen their comments over the last couple of weeks so I just send them my regards. And that\u2019s Reddit, Reddit is people, Reddit is a fun and special but sometimes crazy place. <\/p>\n \u201cI wouldn\u2019t expect anything less from our community.\u201d <\/p>\n Investors on the site offered varied takes on how they wanted to play Reddit\u2019s IPO. <\/p>\n One post read: \u2018Reasons to Short the Reddit IPO & Make Big $$$$\u2019<\/a> while others counter: \u2018Unpopular opinion: I am bullish on Reddit IPO & stock.\u2019<\/p>\n Huffman is right to take the opinions of his community seriously: in the past Reddit investors have proved a powerful force. <\/p>\n In 2021 hedge funds began betting against the American video game and electronics merchandiser GameStop, but a community of retail investors decided to fight back\u2014pumping its share price to the point U.S. Treasury Secretary Janet Yellen called a meeting of key financial regulators\u00a0to discuss the volatility. <\/p>\n Huffman\u2014who was recently forced to defend his $193 million salary package<\/a> while the site\u2019s moderators go unpaid\u2014doubled down on his praise for users when asked if he was disappointed in their reaction.<\/p>\n \u201cI think they\u2019ve helped us get here,\u201d Huffman said. \u201cReddit is nothing without our users and communities. I think that\u2019s the beautiful thing about Reddit is they tell it like it is. <\/p>\n \u201cBut you have to remember, they\u2019re doing that on Reddit. It\u2019s a platform they love, it\u2019s their home on the internet. It\u2019s such a privilege for me and the team to get to work on Reddit, but they really are Reddit.\u201d<\/p>\n Despite flagging the decision to offer Reddit users first refusal on the IPO as a risk, Huffman added he doesn\u2019t believe it\u2019s a \u201ccontroversial\u201d decision to offer those who helped build the platform the chance to benefit from its listing. <\/a><\/p>\n \u201cThe best investors of Reddit are people who use Reddit,\u201d he said. \u201cI want our investors to be users and I\u2019d love our users to be investors. We\u2019re all building this together.\u201d<\/p>\n When the platform\u2014which is free to use\u2014first began looking at an IPO, questions were raised about how valuable the company actually is<\/a> given the fact in its 20-year history, it\u2019s never turned a profit.<\/p>\n While the site claims<\/a> to have more than 73 million daily active users and more than 16 billion posts as of December 2023, profitability remains an \u201cimportant milestone\u201d Huffman believes he\u2019s getting \u201ccloser and closer\u201d to achieving. <\/p>\n Concerns have also been raised about how Reddit plans to compete with other social media giants for advertising\u2014which reportedly makes up 95% of its revenue\u2014when it operated at a loss of $90.8 million in 2023. <\/p>\n The site\u2019s IPO filings lifted the lid on how the company intends to change those fortunes around. <\/p>\n That includes launching services so that Redditors can generate revenue for themselves, as well as leveraging its data for search, AI training, and research. <\/p>\n Its S-1 filing reads: \u201cAs the world becomes increasingly data-driven, we offer solutions that are human- and experience-focused. We expect our data advantage and intellectual property to continue to be a key element in the training of future LLMs.\u201d<\/p>\n<\/div>\nDo Reddit users want to short Reddit\u2019s stock?<\/h2>\n
Reddit\u2019s profitability questions<\/h2>\n
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