Wall Street will witness one of the year’s most highly anticipated IPOs this week, when the almost two-decade-old social media platform Reddit goes public on Thursday.
Here are five things you should know about Reddit and its devoted users:
1. Not new
Reddit was launched a year after Facebook in 2005 by Steve Huffman and Alexis Ohanian, two computer science graduates from the University of Virginia.
The site was originally envisioned as a method to share and discuss fascinating stuff from around the web, just like it is now.
The name “Reddit” is a play on the words “read it,” which reflects the site’s early emphasis on link-sharing and conversation.
The site’s design is a no-frills homage to the early internet, when message boards, forums, and blogging dominated online discussions.
2. New Yorker, Vogue and… Reddit?
Conde Nast Publications, the producer of premium glossy publications like Vogue and The New Yorker, acquired Reddit shortly after its start.
The site’s community-driven approach and low moderation attitude rapidly drew a passionate following, particularly among tech-savvy users who avoided social media platforms such as Facebook and Twitter.
However, unsure what to do with the money-losing (and off-brand) network, Conde Nast split out Reddit in 2011, effectively handing it back to venture financiers.
The startup attracted additional investors, including Tencent, the Chinese internet behemoth. Future ChatGPT star Sam Altman led a fundraising round in 2014 and temporarily served as CEO.
3. Ask Me Anything
Reddit is essentially powered by thousands of “subreddits” – forums monitored by their authors.
r/funny, r/games, and r/music are among the most popular subreddits, with tens of millions of users.
Some Reddit practices have become social media conventions, such as AMAs, or Ask Me Anything sessions in which users can ask an interviewee any question within a set period of time.
Some of the world’s most prominent politicians, famous scientists and athletes, as well as ordinary people with interesting vocations, have all taken part in AMAs.
During his AMA in 2012, then-President Barack Obama nearly brought down the website.
Subreddits are so important to the site’s experience that Reddit reserved 8% of its shares for subreddit moderators and top users to participate in the IPO.
4. r/wallstreetbets
Reddit made headlines in 2021 when a group of small-time traders on the r/wallstreetbets subreddit helped boost the stock price of GameStop, a video game retailer, squeezing some of Wall Street’s most savvy investors who had bet against, or shorted, the company.
The events were adapted into a Hollywood film, “Dumb Money,” which warned Wall Street about the volatility of so-called “meme stocks” and the capacity of social media to shake the financial establishment.
In its IPO filing, Reddit warned that due to the whims of r/wallstreetbets investors, who may one day decide to turn on Reddit itself, the share price “could experience extreme volatility.”
5. Never a profit
Reddit, which is nearly two decades old, has never made a profit, and many Wall Street analysts are skeptical that the company’s stock is a safe investment.
According to its filing, Reddit lost $90.8 million last year and $158.6 million the year prior.
For the majority of its life, the firm had little interest in making money, and CEO and founder Huffman has stated that it wasn’t until his return to Reddit in 2018 that it began to plan a course toward profitability.
That hasn’t always been easy, given the site’s independent-minded user base, which dislikes other ad-heavy social media platforms like Facebook and Instagram.
To appease advertisers, Huffman defied corporate policy in 2020 and imposed stricter content control standards, which irritated some of his long-time users.