December 25, 2024

Reddit Premium users who participated in the company’s initial public offering collectively made millions of dollars after the company’s stock surged on its first day of trading.

While Reddit users told CNBC in interviews ahead of the launch that they would skip the IPO due to concerns about the business and the company’s often fraught relationship with hosts, Chief Financial Officer Drew Vollero ) Tell Axios Tens of thousands of users ended up buying shares.

The stock made its debut on Thursday, with shares rising 48% to close at $50.44, above its IPO price of $34.

Certain Reddit users, as well as company insiders and their friends and family, were able to participate in the IPO through the company’s Directed Share Program (DSP).This is a model used by companies like Airbnb, Rivian and Dosimiti Reward their loyal users and customers.

Reddit and existing interested parties sold 22 million shares in the offering, of which approximately 1.76 million shares were issued through the DSP, equivalent to 8% of the transaction. The shares are offered based on users’ reputations, measured through what the company calls “karma.”

Since Reddit’s DSP has no lock-up period, participants can sell shares immediately, while company insiders and early investors have to wait approximately 180 days. The stock surged to $57.80 shortly after the IPO, and some users said they sold after an early rebound.

A Reddit user named LearnedButt claim Earned $20,000 after first going viral on r/RedditIPO forum. The user said they sold the stock for $54 per share.

LearnedButt wrote: “Even when it went up to 100 shares, I was calm and didn’t feel FOMO at all.” He used the abbreviation because he was worried about missing out. “Here’s 20K that I didn’t have an hour ago.”

Reddit user friskevision wrote in reply to LearnedButt: “While I didn’t invest as much as you, I did make $1,500. Reddit finally compensated me for all these years of use. :)”

Meanwhile, user blackberrydoughnuts expressed regret for selling too late after the stock price fell below $50.

“I sold 1,000 shares at $48, and I regret not selling sooner when the stock price was $54!” Blackberry Donuts wrote. “I really should do this!”

Reddit users use E-Trade to Buy Sharing via DSP, this feature is only available to US residents.

Reddit user Reepicheepee made a small investment in these stocks.

“Just sold 15 of them for $50,” Reepicheepee said. “I saw the price drop and decided to cash out. However, the equity was only $250! I will continue to watch the price throughout the day to see if I made the right decision…”

While some Reddit users are out to make a quick buck, others like follysurfer plan to become long-term Reddit shareholders.

“There are 20 shares,” follysurfer wrote. “I think I’ll hold them for 20 years and see what happens.”

Stock discussions on Reddit are a familiar topic and one of the reasons the site is so famous.

The Wallstreetbets subreddit is also known for its role in fueling the 2021 meme stock boom and the rapid rise of stocks like it game station and AMC Entertainment.

Reddit CEO Steve Huffman acknowledged the importance of Wallstreetbets in an interview with CNBC on Thursday and dismissed concerns that the vocal community could cause any problems on Reddit’s first day of trading.

“The beauty of Reddit is that they tell things as they are,” Huffman said. “But you have to remember, they’re doing this on Reddit. It’s their beloved platform, it’s their home on the internet.”

Redditor erjo5055 said on the Wallstreetbets forum, “I guess using this site for almost 10 years has finally paid off. I’m sad I didn’t buy more shares, I was going to buy twice as many shares.”

Reddit user Galicate responded: “High-5, DSP dumper,” adding, “Never thought this site would make me money, but here we are!”

One commenter on Wallstreetbets, PatrickBateman-AP, had a word of caution for those who haven’t sold yet.

“Definitely going to plummet tomorrow,” Patrick Bateman of the Associated Press wrote.

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