Current:Home > MarketsReddit stock is about to go hit the market, the platform's users are not thrilled -Wealth Axis Pro
Reddit stock is about to go hit the market, the platform's users are not thrilled
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Date:2025-04-17 17:30:56
A social media platform is set to hit the stock market this week and some users are worried about what will happen to the site after it goes public.
Reddit is seeking a valuation of up to $6.4 billion in an Initial Public Offering, according to regulatory filings.
The company is set to offer about 22 million shares at a range of $31 to $34 per share and will hit the public market Thursday, according to Market Insider. The company offered some shares to select users ahead of the offering
The offering will be the first from a social media platform since Pintrest in 2019. The stock traded mostly sideways for the first couple of months and found its first major rally at the end of June.
Users across the site expressed concerns about the company controlling site going public and the effects it will have on the platform.
Users worry about IPO
The platform's user base is drawn to the communities formed around niche topics moderated by volunteers.
"Moderating tiny communities has to be the work of the community members, and it is hard to imagine people volunteering to help Facebook, or Microsoft, or other publicly traded multi-billion-dollar industries," Nathan Green, a Reddit user and science fiction and fantasy author told USA TODAY.
The company agreed with Green in its regulatory filings saying, "a large portion of the content on our platform comes from a small number of Redditors contributing to communities." Bloomberg Opinion's Dave Lee said that the risk section of Reddit's regulatory findings are double that of Twitter's and Facebook's combined.
"Users are not married to the platform. Facebook has me by my friend group. Mostly on reddit I'm shouting into the void and the reward is a hundred upvotes," Green said on the top response in thread on a The Verge article on the IPO. "I can get that anywhere else. There's nothing special about this platform as opposed to another."
Other users posted concerns that the IPO would degrade the site's operations in search of profit.
"Reddit Inc. is in control, so changes will happen according to the goals of Reddit making money," user u/nihiltres posted on a thread of a Rueters article announcing the offering.
In a Reddit chat with USA TODAY u/nihiltres — who has had the account since 2011 — said that changes to the site ahead of the offering have made the site less usable.
"They're putting a round of visual polish on the site that isn't always congruent with improving the user experience," u/nihiltres said. "It feels rushed."
USA TODAY reached out to Reddit about user's concerns and did not receive a response.
Tech IPOs not a guarantee of success
The recent track record of tech IPOs has been mixed:
- Uber stock stumbled on its first day of trading in 2019, opening at $42 and closing at $41, well below the expected $45. The stock has been on a roller coaster since, hovering around $20 in June of 2022 and hitting a high of $81.03 in February of 2024.
- Etsy went public April of 2015 at $31 but by November it sunk below $10.
- Robinhood faced similar negative sentiment as Reddit at its IPO in the wake of the Gamestop stock phenomenon that originated on the platform's "Wallstreetbets" subreddit. When it debuted in July of 2021 shares fell as much as 10% on the first day of trading and closed down 8%. In August it was lifted to $55 but by November it sunk under the $38 offering price hitting the mid-teens at the start of 2022
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