A popular topic on Reddit is whether or not the next big meme stock is Reddit itself. In a unique move, Reddit has invited power users to invest in its IPO, with select members like Jeremiah Johnson, a longtime moderator of various subreddits, getting first dibs on purchasing stock.
“You would never see Instagram doing something like this,” Johnson told TechCrunch. “But on Reddit, so much of the content is driven by Redditors and unpaid moderators. If any site was going to do it, they would be the one.”
This approach of giving users the same privilege as institutional investors is uncommon in the social media world. But for Reddit, it is a way to show appreciation for its devoted community of 75,000 members who will have the chance to invest based on their karma, a metric that measures a user’s contribution to the site.
Reddit has sent a direct message to its users, asking them to buy stock in its IPO. Johnson shared a screenshot of the message on Twitter, calling it the “meme-est of the meme stocks.”
@JeremiahDJohns
For potential investors, there are not only the usual considerations such as profitability, but also the question of whether Reddit could be the next meme stock, which could bring great successes or failures.
Reddit has already made its impact on the stock market, with its communities like r/WallStreetBets being listed as a risk factor in its S-1 filing. This community, with over 15 million members, famously organized a short squeeze on GameStop stock in 2021, costing hedge funds billions. Other low-performing stocks like AMC and Bed Bath & Beyond have also been manipulated by retail traders, earning the label of “meme stocks”.
Gillian Tahajian
“I see [Reddit] as a GameStop stock,” she said. “I think there’s too large of a loyal base that will buy and never sell.”
Gillian Tahajian, a 24-year-old marketing analyst, sees potential in getting in on a meme stock early. Though she only joined Reddit a month ago, she now scrolls through the platform nightly for gossip and personal finance advice. Though she was not invited to invest in Reddit’s IPO, she plans to do so when it goes public.
Aside from the meme potential, Tahajian also sees potential in Reddit as a search engine. With Google being overrun by low-quality results, it has become common for users to tack on “Reddit” to the end of their searches. Tahajian believes that Reddit could fill in this gap in the market.
While Reddit’s devoted user base is a valuable asset, the company’s relationship with its most dedicated users has been strained in the past year. Changes to the API caused many communities, known as subreddits, to go dark in protest, making parts of the site inaccessible.
For Johnson, Reddit’s invitation to invest in its IPO can be seen as an olive branch to these power users.
“Reddit is really dependent on power users who moderate the site, and because they’ve given those power users actual power, power users did for a day or two literally make the site unusable,” Johnson said. “Reddit is just structurally more dependent on their power users than any other social media site, and I think that tells you why they’re doing this, and why no other social media site would.”
Johnson plans to take advantage of this opportunity, not for potential returns, but to document the experience for his newsletter.
Max Spero, a startup founder and avid Reddit user for 11 years, also plans to invest in Reddit post-IPO. He values the platform for its communities such as r/breadit and r/magictcg, but wonders how much more Reddit can grow.
Though Reddit has a long way to go in becoming profitable, its IPO filing states that it still has potential to increase revenue through ads. The company has also secured a deal with Google, who will pay $60 million per year for access to its content for training large language models. Yet with only 73.1 million global daily active users (DAUs), less than half of other social media platforms, like X (formerly Twitter), Reddit has room to grow.
Amit Kukreja, a stock market YouTuber and Reddit user, is less optimistic about Reddit’s IPO.
“Inviting people to be investors is fine, but once I found out that they were listing r/WallStreetBets as a risk, I thought that was a ‘f— you’ to the user,” he said. “What would’ve been really cool is if they gave users free shares – Sam Altman or one of the main VCs could’ve taken out even 0.2% of their shares [for users].”
For some, the potential for volatile stock market antics, like those seen with GameStop, is a deterrent. But for Johnson, buying into Reddit’s IPO is a “rational prediction of irrationality”.
Johnson
“Regardless of whether or not this technically makes sense, if this is a thing that’s going to happen, you might as well get in,” he said. “This might just be the next meme stock.”
