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Sarah Gilbert spends a lot of time on Reddit. For the past three years, she has helped moderate the r/AskHistorians subreddit, which has 2 million members and was the subject of her Ph.D. dissertation. She has been lurking in the forum since 2012.

But when the subject turns to Reddit’s upcoming IPO, Gilbert’s excitement wanes. The 19-year-old social media company set aside 8% of the shares in its offering for certain users and moderators, along with some company insiders and their friends and family members. Airbnb, Rivian and Doximites used a similar model when they went public as a way to reward power users or early adopters.

Reddit’s IPO is different. While its predecessors went public during a record-breaking IPO stretch in 2020 and 2021, Reddit’s planned debut on the New York Stock Exchange this week will be the first major tech offering of the year and lands after big industry bills that were highlighted by falling valuations, reduced investment and an emphasis on profit over growth. The two venture-backed technology debuts of 2023 — Instacart and Clavio — failed to pop, a sign that the IPO entry price no longer equals free money.

It’s not just market conditions that are causing Reddit moderators like Gilbert to walk away from an investment opportunity. Reddit has long had a rocky relationship with moderators and the site’s most dedicated users, or Redditors. After a user outcry last year stemming from a policy change that forced some third-party developers to pay more to use the company’s application programming interface (API), Reddit CEO Steve Huffman in comparison the moderators of the site to the “landed nobility.”

Gilbert, who works as a research manager at Cornell University’s Citizens and Technology Lab, said the bad blood of the conflict “really took away a lot of the goodwill and energy” of those who were putting the most time and effort into trying to to build communities on the site. Now she finds it hard to see the appeal of paying money to own a piece of the company and bet on its future.

“It’s like, okay, you’ve invested your time, you’ve invested your emotional well-being and you’ve put yourself at risk, now invest your money in this platform,” Gilbert said. “It doesn’t really seem like Reddit is necessarily giving back, as much as it looks like it might want even more.”

Reddit founders Alexis Ohanian (left) and Steve Huffman (right)


Reddit, a site with 60,000 daily active moderators that hosts forums on topics ranging from the mainstream to the extremely obscure, plans to sell shares at $31 to $34 apiece in its IPO, potentially valuing the company at about $6.5 billion, and trades under the ticker symbol “RDDT.” At the top of the tech market in 2021, Reddit was valued by private investors at $10 billion, according to PitchBook.

Reddit’s Directed Sharing Program, or DSP, is for certain US-based users with a high reputation across the site — measured in so-called karma points — or for moderators, as a way to “recognize those who have contributed significantly to Reddit in years,” the company said explaining supply. Reddit in general said underwriters have reserved 1.76 million of the 8 million shares in the DSP IPO.

Some invitees say they are worried about the company’s financial health. Reddit posted a net loss of $90.8 million last year, an improvement from 2022, when the deficit hit $158.6 million. The company said in its prospectus that it had accumulated a cumulative loss of $716.6 million.

Reddit is competing for ad dollars in an extremely tough market against the likes of Google and its YouTube service, Facebookand TikTok apps. In its documentation, Reddit also lists as competitors Wikipedia, A clickx Pinterest, RobloxDiscord and on Amazon Twitch.

A moderator with the username BuckRowdy, who spoke on condition that his real name not be disclosed, told CNBC he was streaming the IPO and said his opinion appeared to be widely shared.

“People seem to have a negative view that it’s going to go down immediately or you’re going to lose money,” said BuckRoddy, who moderates subreddits including r/UnresolvedMysteries and r/TrueCrime. “I don’t see anybody in any space that I’m in that takes it seriously, that sees it as an investment or anything like that.”

Reddit did not provide comment for this story.

Stock up on memes

While there is a lot of skepticism about the IPO, some Redditors seem ready to get in on the action, based on forum comment.

A Reddit user named FormicaDinette33 said on r/RedditIPO subreddit that they plan to buy 10 shares “just to test the process,” while SpindriftRascal plans to spend $5,000, an amount that allows them to “be happy if it does well and not care too much if it crashes,” according to a post.

Sweatycat, a moderator of the r/IAmA and r/LifeProTips threads, plans to participate in the IPO, telling CNBC that they “both like Reddit as a company and see this as a potentially good investment opportunity.” The Redditor, who requested anonymity, said other moderators may have “mixed feelings” about Reddit going public because of their “strained relationship” with management.

For wrestlegirl, who moderates the AEWOfficial subreddit for over 100,000 wrestling fans, the stock purchase program is “a nice enough thing to offer, but it’s not a reward at all” and doesn’t project to be a “long-term stable investment.”

Wrestlegirl, who also asked not to be named, told CNBC that owning stock might be “something fun or a fun experience to talk about later, but I don’t think anyone is really taking Reddit’s IPO seriously.” .

“He makes so much fun”

Akaash Maharaj is not eligible for the program as a resident of Canada. He said he would decline an invitation to participate even if he could, largely because of business concerns. He also says that moderators should not be motivated to improve the company’s share price at the expense of the “long-term identity of the platform.”

“There are very few Redditors that I would say are enthusiastic about the IPO,” Maharaj told CNBC.

For approximately five years, Maharaj has helped moderate the r/Equestrian forum of 72,000 horse enthusiasts. He is also a member of Reddit Mod Councila select group of power users who come together to improve the site and, in his words, “make decisions that are in everyone’s best interest.”

“Our track record there has been mixed,” Maharaj said with a smile.

While he’s dubious about the IPO and not particularly bullish on the stock, Maharaj said DSP could be a “very clever” way for management to invite buy-in and fend off any efforts by the Reddit community to derail an important moment in the history of the company.

“If they hadn’t done that, there would have been an increased risk that more Redditors would have rhetorically shorted the stock as it went to market,” Maharaj said. The company is saying, “Look, buy some stock and you might make money, but you only make money if you don’t do anything to disrupt the IPO itself,” he said.

Wrestlegirl said that despite the swarm of negativity she sees among the moderators, she thinks a decent number of them will participate in the IPO.

“It gets made fun of so much it’s almost a meme,” she said. “I think a lot of those who are secretly mocking don’t want to be left out of things if it becomes a GameStop.”

Courtney Swearingen says she won’t be one of them.

Swearingen, an attorney, has been a Reddit moderator for about 13 years, currently for music forums and for her hometown of Chicago. During this time, she has developed a distrust of the company. In 2015, after the controversial firing of a Reddit employee named Victoria Taylor, hundreds of moderators locked down their subreddits in a protest effort led by Swearingen.

Swearingen told CNBC that after that ordeal, Reddit sent her and other moderators to San Francisco to gather feedback and clear the air. But she has not seen much change for the better, and she no longer expects it.

“Every time something is promised or new ideas are presented, it’s never done well and it never goes well,” Swearingen said. “Even with the opportunity to buy a share, I wouldn’t do it. I can’t risk money on a company I can’t trust for a decade.”

— CNBC’s Cameron Costa contributed to this report

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