Reddit Power users who participated in the company’s IPO earned millions of dollars as a group in profits after the stock’s big jump on its first day on the market.
While Redditors interviewed by CNBC before the offering said they were skipping the IPO due to concerns about the business and the company’s often rocky relationship with moderators, Chief Financial Officer Drew Vollero told Axios that tens of thousands of users ended up buying shares.
The stock jumped 48% on its debut Thursday, closing at $50.44, up from its offering price of $34.
Some Redditors, along with company insiders and their friends and family, were able to join the initial public offering through the company’s direct sharing program, or DSP. It’s a model used by companies like Airbnb, Riviano AND Doximity to reward its users and loyal customers.
Of the 22 million shares sold by Reddit and existing stakeholders as part of the offering, approximately 1.76 million were made available via DSP, accounting for 8% of the deal. Shares were offered based on the user’s reputation, measured through what the company calls karma.
Since Reddit’s DSP has no lock-up period, participants could sell shares immediately, unlike insiders and early investors, who have to wait around 180 days. The stock rose as high as $57.80 shortly after the IPO, and some users said they sold after the initial rally.
A Redditor with the username LearnedButt claimed on the r/RedditIPO forum that he made a $20,000 profit after the initial pop. The user said he sold the stock at $54 per share.
“Even if it gets to 100/share, I’m fine and don’t feel an ounce of FOMO,” LearnedButt wrote, using the acronym for fear of losing it. “That’s 20K 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 quickly made $1,500. Reddit is finally paying me back for those years of use. :)”
Meanwhile, user blackberrydoughnuts expressed regret for selling too late after the stock fell below $50.
“I sold my 1000 shares at $48 and I’m sorry I didn’t sell them sooner when they were at $54!” she wrote blackberrydoughnuts. “I really should have!”
Reddit users used E-Trade to purchase stocks via the DSP, which is only available to US residents.
Reddit user Reepicheepee made a small investment in the stock.
“I just sold 15 of them for $50,” Reepicheepee said. “I saw the price drop and decided to cash out. Small net of $250, though! I will continue to watch the price throughout the day to see if I made the right choice…”
While some Redditors were intent on making quick money, others like crazysurfer plan to become Reddit shareholders in the long term.
“I got 20 shares,” wrote follisurfer. “I guess I’ll keep them for 20 years and see what happens.”
Stock chatter on Reddit is a familiar topic and one of the reasons the site is so popular.
The Wallstreetbets subreddit has also become known for its role in helping generate the meme stock boom of 2021 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 could cause problems on Reddit’s first day of trading.
“The great thing about Reddit is that they tell it like it is,” Huffman said. “But you have to remember they do it on Reddit. It’s a platform they love, it’s their home on the internet.”
Reddit user erjo5055 said in the Wallstreetbets forum: “I guess using this site for almost 10 years has finally paid off. I’m sad I didn’t buy more shares, I would have bought double.”
Reddit user Galactic replied, “High-5, fellow DSP dumper,” adding, “I never thought this site would make me money, but here we are!”
A Wallstreetbets commentator, PatrickBateman-AP, warned anyone who hasn’t sold yet.
“It will absolutely collapse tomorrow,” PatrickBateman-AP wrote.