Reddit Power users who participated in the company's IPO made millions of dollars in profits after the stock's big jump on its first day on the market.
While Redditors interviewed by CNBC ahead of the offering said they were skipping the IPO due to concerns about the business and the company's relationship with moderators, CFO Drew Vollero told Axios that tens of thousands of users ended up buying shares.
The stock jumped 48% in its debut Thursday, closing at $50.44, up from its offer price of $34.
Some Redditors, along with company insiders and their friends and family members, were able to join the IPO through the company's directed joint program, or DSP. It is a model that has been used by companies such as Airbnb, Rivian And the approach To reward loyal users and customers.
Of the 22 million shares sold by Reddit and existing stakeholders in the offering, about 1.76 million were made available through the DSP, equivalent to 8% of the deal. Shares were offered based on user reputation, which is measured by what the company calls karma.
Since Reddit's DSP has no lock-up period, participants can sell shares immediately, unlike company insiders and early investors, who have to wait about 180 days. The stock rose to $57.80 shortly after the IPO, and some users said they sold after the early rally.
A Redditor with the username LearnedButt claimed on the r/RedditIPO forum that he made a profit of $20,000 after the initial appearance. The user said they sold the stock at $54 per share.
“Even if the stock price hits 100 shares, I'm calm and don't feel an ounce of FOMO,” LearnedButt wrote, using the abbreviation for fear of missing out. “That's 20 grand I didn't have an hour ago.”
In a response to LearnedButt, Reddit user friskevision wrote, “Even though I didn't invest as much as you, I made a quick profit of $1,500. Reddit is finally paying me back for those years of using it. :)”
Meanwhile, a Blackberry Donuts user lamented selling too late after the stock price fell below $50.
“I sold 1,000 shares of my own at $48, and I'm sad because I didn't sell earlier when the stock was $54!” Blackberry Donuts Books. “I really should have!”
Redditors used e-commerce to buy stocks via a DSP, which was only available to US residents.
Reddit user Reepiceepee made a small investment in stocks.
“I just sold 15 for $50,” Rebechebe said. “I saw the price going down and decided to take advantage. Small net of $250, though! I will continue to monitor the price throughout the day to see if I made the right decision…”
Although some Redditors were looking to make a quick buck, others like follysurfer plan to become long-term Reddit contributors.
“Got 20 shares,” Fullserver wrote. “I think I'll keep them for 20 years and we'll see what happens.”
Stock chatter on Reddit is a familiar topic and one of the reasons the site is so popular.
The Wallstreetbets subreddit is known for its role in helping spark the 2021 meme stock boom and the meteoric rise of stocks like GameStop And AMC Entertainment.
Reddit CEO Steve Huffman acknowledged the importance of Wallstreetbets in an interview with CNBC on Thursday, dismissing concerns that the vocal community might cause any problems on Reddit's first day of trading.
“That's the nice thing about Reddit, they tell it like it is,” Huffman said. “But you have to remember they're doing it on Reddit. It's a platform they love, it's their home on the internet.”
Redditor erjo5055 said on the Wallstreetbets forum, “I think using this site for almost 10 years has finally paid off. I'm sad I didn't buy more shares, I would have bought twice as many.”
“High-5, fellow DSP flipper,” Reddit user Galactic responded, adding: “I never thought this site would make me money, but here we are!”
One Wallstreetbets commenter, PatrickBateman-AP, had a word of caution for anyone who hasn't sold yet.
“It will go absolutely down tomorrow,” Patrick Bateman-AP wrote.
Watch: Reddit CEO Steve Huffman on his first IPO.
