Redditors bank millions as a group on stock opening day

Reddit savvy users who participated in the company’s IPO made millions of dollars as a group in profits after the stock surged on its first day on the market.

While Redditors interviewed by CNBC ahead of the offering said they were skipping the IPO because of concerns about the company’s business and relationship with moderators, CFO Drew Vollero said Axios that tens of thousands of consumers ended up buying shares.

Shares jumped 48% on Thursday’s debut, closing at $50.44, versus an offer price of $34.

Some Redditors, along with company insiders and their friends and family members, were able to join the IPO through the company’s Directed Sharing Program, or DSP. This is a model that is used by companies such as Airbnb, Rivian and Doximites to reward their loyal users and customers.

Of the 22 million shares that Reddit and existing stakeholders sold in the offering, about 1.76 million were granted through the DSP, which equates to 8% of the deal. Shares were offered based on a user’s reputation, measured by what the company calls karma.

Since Reddit’s DSP has no lock-up period, participants can sell shares immediately, unlike company insiders and early investors who have to wait around 180 days. Shares jumped to $57.80 shortly after the IPO, and some users said they had sold after the early rally.

A Redditor with the username LearnedButt claimed on the r/RedditIPO forum to make a profit of $20,000 after the initial popup. The user said he sold the stock at $54 per share.

“Even if it goes to 100/share, I’m cool and don’t feel an ounce of FOMO,” LearnedButt wrote, using the acronym for fear of missing out. “That’s 20 grand that I didn’t have an hour ago.”

In response to LearnedButt, Reddit user friskevision wrote: “Even though I didn’t invest as much as you, I made $1500 fast. Reddit has finally paid off for me for those years of using it. :)”

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 sad I didn’t sell sooner when they were at $54!” blackberrydoughnuts wrote. “I really had to!”

Redditors use E-Trade to purchase shares through the DSP, which was only available to US residents.

Reddit user Reepicheepee made a small investment in the stock.

“I just sold 15 for $50,” said Ripichipi. “I saw that the price was falling and I decided to cash in.” A small net amount of $250 though! I will continue to watch the price throughout the day to see if I made the right peck…”

While some Redditors wanted to make a quick buck, others like follysurfer plan to become long-term Reddit shareholders.

“Got 20 shares,” wrote follysurfer. “I guess I’ll keep them for 20 years and see what happens.”

Reddit stock chatter is a familiar topic and one of the reasons the site is so popular.

The Wallstreetbets subreddit is known for its role in helping the 2021 boom in meme stocks 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 trouble on Reddit’s first day of trading.

“That’s the good thing about Reddit, they tell it like it is,” Huffman said. “But you have to remember that they’re doing this on Reddit. It’s a platform they love, it’s their home on the internet.”

Redditor erjo5055 said on the Wallstreetbets forum: “I guess using this site for almost 10 years finally paid off. I’m sad I didn’t buy more shares, I would have bought 2x more.”

Reddit user Galactic responded: “High 5 fellow DSP dumper,” adding: “I never thought this site would make me money, but here we are!”

One Wallstreetbets commenter, PatrickBateman-AP, cautioned anyone who hasn’t sold yet.

“Absolutely going down tomorrow,” writes PatrickBateman-AP.

I’M WATCHING: Reddit CEO Steve Huffman on IPO debut.