Technology
Wednesday, March 20th, 2024 3:41 pm EDT
Key Points
- Reddit is preparing for its initial public offering (IPO), offering shares at $31 to $34 each, potentially valuing the company at around $6.5 billion. The IPO comes after a tumultuous period in the tech industry, marked by declining valuations and reduced investment, making potential investors wary of the opportunity.
- Reddit’s IPO differs from previous tech offerings as it comes amidst a challenging market environment and a strained relationship between the platform and its moderators and dedicated users. Recent conflicts, such as a user protest over policy changes, have eroded trust and enthusiasm among these groups, leading many to question the appeal of investing in the company.
- While Reddit has introduced a directed share program (DSP) to reward certain users and moderators, concerns about the company’s financial situation, including a net loss of $90.8 million last year, and competition in the advertising market raise doubts about the potential success of the IPO. Many Redditors, including moderators like Sarah Gilbert, are skeptical about participating in the offering due to these factors and their strained relationship with Reddit’s management.
Sarah Gilbert, a Ph.D. candidate and moderator of the r/AskHistorians subreddit, spends a significant amount of time on Reddit, but her enthusiasm wanes when discussing Reddit’s upcoming IPO. While Reddit follows a model similar to other companies like Airbnb and Rivian by reserving shares for users and moderators, the timing of Reddit’s IPO is unique. It arrives amid a major reckoning in the tech industry, marked by reduced investment and a shift towards profit over growth. Gilbert, like many moderators, feels disillusioned by Reddit’s rocky relationship with its users, exacerbated by conflicts such as a user protest over a policy change. The tension has eroded goodwill among those who dedicated themselves to building communities on the platform, making it difficult for Gilbert to see the appeal of investing in Reddit. Despite Reddit’s plans to sell shares at $31 to $34 apiece, potentially valuing the company at around $6.5 billion, some users express concerns about the company’s financial situation, citing its net loss of $90.8 million last year. Competing in a challenging advertising market against giants like Google and Facebook adds to the uncertainty surrounding Reddit’s future prospects. While Reddit acknowledges the volatility of its stock price, some users express cautious interest in participating in the IPO, viewing it as a potentially fun or interesting experience. However, many moderators remain skeptical, with some expressing skepticism about Reddit’s ability to deliver on promises or improve its relationship with the community. Despite Reddit’s efforts to involve users in its IPO through a directed share program, some, like Courtnie Swearingen, remain wary, citing past disappointments and a lack of trust in the company.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/03/20/reddit-power-users-balk-at-chance-to-participate-in-ipo-as-debut-nears.html
