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The company’s stock soared 48% in its initial public offering on Thursday, closing at $50.44, above the asking price of $34.
Some Redditors, along with company insiders and their friends and family, were able to participate in the initial public offering through the company’s Directed Shared program (DSP). This is the model that companies like Airbnb, Rivian, and Doximity have used to reward their loyal users and customers.
Of the 22 million shares sold by Reddit and existing parties in the offering, approximately 1.76 million shares were made available through DSP, representing 8% of the transaction. The shares were offered based on user reputation, measured through what the company calls Karma.
Reddit’s DSP has no lock-up period, so participants can sell their shares immediately, unlike company insiders and early investors who have to wait about 180 days. Immediately after the IPO, the stock price soared to $57.80, but some users said they sold after the initial rally.
One Redditor with the username LearnedButt claimed on the r/RedditIPO forum that he made $20,000 in profits after the initial pop. The user said he sold the stock for $54 per share.
“Even at 100 per share, I’m calm and not feeling the slightest bit of FOMO,” LearnedButt wrote, using the acronym for fear of missing out. “This is 20K that wasn’t there an hour ago.”
In a reply to LearnedButt, Reddit user friskevision wrote, “I didn’t invest as much as you, but I made $1,500 in no time. Reddit is finally giving me back what I’ve been paying for all these years. :)” is written.
Meanwhile, user blackberrydoughnuts expressed regret that he was too slow to sell after the stock price fell below $50.
“I sold 1000 shares for $48 and I regret not selling sooner when it was $54!” wrote Blackberry Donuts. “I really should have done that!”
The Redditor used E-Trade to purchase the stock via a DSP, which is only available to US residents.
Reddit user Reepicheepee made a small investment in the stock.
“We just sold 15 for $50,” Reepicheepy said. “I saw the price going down and decided to cash out. However, the net amount was $250. I will continue to monitor the price throughout the day to see if I made the right decision. is…”
While some Reddit users are looking to make a quick buck, others, like follysurfer, plan to become long-term shareholders in Reddit.
“I got 20 shares,” Foley Surfer wrote. “I’m going to keep it for 20 years and see what happens.”
Stock chats on Reddit are a familiar theme and one of the reasons the site is so well-known.
The Wallstreetbets subreddit also became known for its role in sparking 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, dispelling concerns that the vocal community could cause any problems on Reddit’s first day of trading.
“The great thing about Reddit is that it tells it like it is,” Huffman said. “But you have to remember that they’re doing it on Reddit. It’s a platform they love and it’s their home on the internet.”
Redditor erjo5055 wrote on the Wallstreetbets forum: “I think my nearly 10 years on this site has finally paid off. I regret not buying more shares. I was going to buy twice as many shares.” said.
Reddit user Galactic responded, “High five, fellow DSP dumpers,” adding, “I never thought I could make money on this site, but here I am!”
One Wallstreetbets commenter, Patrick Bateman-AP, issued a warning for those who have not yet sold.
“It’s definitely going to plummet tomorrow,” Patrick Bateman Associated Press wrote.
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