Business Reddit power users balk at chance to participate in IPO as Wall Street debut nears - Reddit moderators told CNBC that they’re declining the offer, citing lingering tensions with management and concerns over the company’s business.

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  • Following the lead of companies like Airbnb and Rivian, Reddit is inviting some users to participate in its upcoming IPO.
  • Reddit moderators told CNBC that they’re declining the offer, citing lingering tensions with management and concerns over the company’s business.
  • “It doesn’t really feel like Reddit is necessarily giving back, so much as it feels like maybe it’s asking for even more,” said Sarah Gilbert, a moderator of the r/AskHistorians subreddit.
Sarah Gilbert spends a lot of time on Reddit. For the past three years, she’s helped moderate the r/AskHistorians subreddit, which has 2 million members and was the subject of her Ph.D. dissertation. She’s been a lurker on 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 Doximity employed a similar model when they went public, as a way to reward power users or early customers.

Reddit’s initial public offering is different. While its predecessors hit the market during a record IPO stretch in 2020 and 2021, Reddit’s planned New York Stock Exchange debut this week will be the first major tech offering of the year, and lands after a major reckoning in the industry that was highlighted by tumbling valuations, reduced investment and an emphasis on profit over growth. The two venture-backed tech debuts of 2023 — Instacart and Klaviyo — failed to pop, a sign that getting in at the IPO price no longer equals free money.

It’s not just market conditions that have Reddit moderators like Gilbert forgoing the investment opportunity. Reddit has long had a rocky relationship with moderators and the site’s most dedicated users, or Redditors. Following a user protest last year stemming from a policy change that forced some third-party developers to pay more for use of the company’s application programming interface (API), Reddit CEO Steve Huffman compared site moderators to “landed gentry.”

Gilbert, who works as a research manager at Cornell University’s Citizens and Technology Lab, said the bad blood from the conflict has “really sort of knocked a lot of the goodwill and the energy” from those who had been spending the most time and effort on trying to build up communities on the site. It’s hard for her to now see the appeal in paying money to own a piece of the company and betting on its future.

“It’s like, OK, you’ve invested your time, you’ve invested your emotional well-being and put yourself at risk, now invest your money into this platform too,” Gilbert said. “It doesn’t really feel like Reddit is necessarily giving back, so much as it feels like maybe it’s asking for even more.”

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

Reddit’s directed share program, or DSP, is intended for certain U.S.-based users with high site-wide reputations — measured in so-called Karma points — or for moderators, as a way to “recognize those who have contributed significantly to Reddit over the years,” the company said in explaining the offering. In total, Reddit said underwriters have reserved 1.76 million of the 8 million shares in the IPO for the DSP.

Some invitees say they’re worried about the company’s financial situation. Reddit recorded a net loss of $90.8 million last year, an improvement from 2022, when its deficit came it at $158.6 million. The company said in its prospectus that it’s racked up a cumulative loss of $716.6 million.

Reddit is competing for advertising dollars in a notoriously difficult market against the likes of Google and its YouTube service, Facebook’s apps and TikTok. In its filing, Reddit also names as competitors Wikipedia, Snap, X, Pinterest, Roblox, Discord and Amazon’s Twitch.

A moderator with username BuckRowdy, who spoke on condition that his real name not be disclosed, told CNBC that he’s passing on the IPO, and said his sentiment appears to be widely shared.

“People do seem to have like a negative view that it’s going to go down immediately or you’re going to lose money,” said BuckRowdy, who moderates subreddits including r/UnresolvedMysteries and r/TrueCrime. “I don’t see anybody in any spaces I’m in that are taking it seriously, that are thinking of it as an investment or anything along those lines.”

Reddit didn’t provide a comment for this story.

Meme stocks​

Of all companies, Reddit knows something about stock market volatility.

The site is home to the infamous r/wallstreetbets subreddit that helped spur the 2021 boom in meme stocks like GameStop and AMC Entertainment, which rose with meteoric speed despite any changes in their business fundamentals.

It’s a risk the company acknowledges in its IPO filing:

“Given the broad awareness and brand recognition of Reddit, including as a result of the popularity of r/ wallstreetbets among retail investors, and the direct access by retail investors to broadly available trading platforms, the market price and trading volume of our Class A common stock could experience extreme volatility for reasons unrelated to our underlying business or macroeconomic or industry fundamentals, which could cause you to lose all or part of your investment if you are unable to sell your shares at or above the initial offering price.”

Joshua White, an assistant professor of finance at Vanderbilt University, said Reddit’s DSP could be “nice stocking stuff” if it were to follow the lead of companies that went public in 2020 and 2021.

“This is usually a good deal because really hot IPO stocks typically go up on the first day,” White said.

However, given the dearth of tech IPOs since the start of 2022, White said Reddit’s offering is “probably a little more risky.”

While there’s plenty of skepticism heading into the IPO, some Redditors appear poised to get in on the action, based on forum commentary.

A Reddit user with the handle FormicaDinette33 said in the r/RedditIPO subreddit that they plan to purchase 10 shares “just to experience the process,” while SpindriftRascal plans to spend $5,000, an amount allowing them to “to be happy if it does well and not care much if it tanks,” according to a post.

Sweatycat, a moderator of the r/IAmA and r/LifeProTips subreddits, plans to participate in the IPO, telling CNBC they “both like Reddit as a company and see this as a potentially good investment opportunity.” The Redditor, who asked not to be identified further, 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 of any sort” and doesn’t project to be a “long-term stable investment.”

Wrestlegirl, who also asked not to be named, told CNBC that owning the stock may be “something fun to have or an amusing experience to talk about later, but I don’t think anyone is actually taking Reddit’s public offering seriously.”

‘It’s being mocked so much’​

Akaash Maharaj is ineligible for the program as a Canadian resident. He said he would decline an invitation to participate even if he could, largely because of concerns about the business. He also says moderators shouldn’t 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 who I would say are enthusiastic about the IPO,” Maharaj told CNBC.

For roughly five years, Maharaj has helped moderate the forum r/Equestrian, consisting of 72,000 horse lovers. He’s also a member of the Reddit Mod Council, a select group of power users who gather with the goal of improving the site and, in his words, to “make decisions that are in everyone’s interest.”

“Our track record there is mixed,” Maharaj said, with a chuckle.

Even though he’s dubious about the IPO and not particularly bullish on the stock, Maharaj said the DSP could be a “very shrewd” way for management to invite participation and fend off any effort by the Reddit community to spoil a major moment in the company’s history.

“Had they not done that, there would have been a heightened risk that more Redditors would have rhetorically run down the stock as it goes to market,” Maharaj said. The company is saying, “Look, buy some shares and you might make money, but you only make money if you don’t do something to disrupt the IPO itself,” he said.

Wrestlegirl said that despite the swarm of negativity she’s seeing among moderators, she thinks a decent number of them will participate in the IPO.
“It’s being mocked so much it’s almost a meme,” she said. “I think a lot of those jeering secretly don’t want to be left out of things if this turns into a GameStop.”

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

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

Swearingen told CNBC that after that ordeal, Reddit flew her and other moderators to San Francisco to collect feedback and to clear the air. But she hasn’t seen much change for the better, and no longer expects it.

“Every time anything 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 in, I would not. I cannot risk money on a company that I haven’t been able to trust for a decade.”

https://www.cnbc.com/2024/03/20/red...nce-to-participate-in-ipo-as-debut-nears.html (Archive)
 
Sarah Gilbert spends a lot of time on Reddit. For the past three years, she’s helped moderate the r/AskHistorians subreddit
Ah, so she's useless. /r/AskHistorians is filled with pompous, hopelessly misinformed assholes.

He’s also a member of the Reddit Mod Council, a select group of power users who gather with the goal of improving the site and, in his words, to “make decisions that are in everyone’s interest.”
I love all these volunteer "power groups" that form useless "councils" to try (unsuccessfully) to dictate terms to the company that provides the platform they use. Every time mods' heads get too big the admins slap them back down, so I don't know why they keep thinking this does any good. Of course, it's yet another club to kick people out of, so I guess that could explain it too.
 
Unlike reddit, Rivian makes a physical product in the USA that is by all accounts and my personal experience, Good.
I don't have a problem with the company itself but a 90% drop in post-IPO price in a year is nothing short of criminal negligence at best and fraud at worst. Especially if these shares are being sold to investors that aren't knowledgeable enough to understand what they're buying, which is exactly what'll happen selling Reddit shares to power users.

Even the dot-coms held on longer than that and most didn't ever do anything but waste money on Aeron chairs and Super Bowl ads.
 
For wrestlegirl, who moderates the AEWOfficial subreddit for over 100,000 wrestling fans
Tranny spotted

He also says moderators shouldn’t be motivated to improve the company’s share price at the expense of the “long-term identity of the platform.”
This sort of thing is exactly why this platform in particular is such a stupid investment. You have hundreds, maybe thousands of severely autistic assholes who are drunk with power over r/SinkFaucetDesign who think they are the ones who should be dictating the "long-term identity" of the entire site.

The moderators have repeatedly demonstrated that they have zero comprehension of most of the issues that they go ballistic over. For example, Reddit having the nerve to rate limit their own API or require subscriptions to a service that probably costs Reddit hundreds of thousands of dollars a year to maintain.

And while the press Reddit has received is nowhere near as negative as say, what KF has received, there is definitely that element where some random post or posting trend gets a bunch of media attention and now you are going to have the additional issue of the stock going volatile. Imagine having your money tied up in something that u/FartSniffingGurl can just come in and shit up at will.

Add to that the operational model for Reddit has been a handful of paid employees and then this army of rapist tranny pedophiles to maintain order. Now they have all the leverage because you literally cannot keep things going without a SUSBTANTIAL investment in paid moderators. Dumb, dumb, dumb.
 
It's going to be so funny when all the reddit jannies end up getting paid from the class action lawsuits.

No they are not "volunteers." you can't volunteer your time for a for-profit organization. For-profit companies are not allowed to "suffer or permit" unpaid labor. It's literally illegal to use free labor as a for-profit company, even if the people doing the work are stupid enough to sign up for it totally voluntarily. It undercuts the real labor market. A huge part of why (for instance) news companies have no ability to compete with reddit for readership in their forums is that they have to actually pay employees to moderate. It creates an unfair environment for competition.

Reddit janny should be compensated minimum wage. It should become the new thing parents talk about instead of McDonald's when they want to imply their child is making decisions that will ruin their life.

"C- in algebra?! You have so much more potential than this. Keep this kind of thing up and the only job you'll be able to get is Reddit janny. Is that what you want from life? Just asking people if they want updoots with that, all day long?! Your father and I sacrificed so much for you."
 
Look at any city or state subreddit and you will see a lot of activity. So, should you advertise there if you want to reach those locations? Well if you look more closely at the activity I think the answer is, "Hell no." The moderation has gone too hard in SJW sanitizing the place. That doesn't just mean the conservatives have been driven out of red state subreddits and hobby/interest subs. It also means that most of the working class African American population is driven out too, as are the immigrant populations. College educated women are pretty much the only demographic actually buying in to the whole SJW package, but there are way better places to reach them than Reddit. A lot of this is about trying to make the site advertiser friendly, but somebody needs to realize that doesn't really make sense for the Reddit context.

If you are advertising on a TV station you might not want the TV hosts to say offensive things or make offensive jokes. Sure, that makes sense. But Reddit users are NOT TV HOSTS. They are more like TV viewers talking amongst themselves. That is the product Reddit sells. They are both content generators AND the people being advertised to.

In order for this site to be a good place to spend advertising money:

1. Corporate advertisers need to be less sensitive to controversy.
2. SJWs need to stop SJWing.

The heat death of the universe will come sooner.
 
It's going to be so funny when all the reddit jannies end up getting paid from the class action lawsuits.
Thats not going to happen. Its not worth the money or the effort and nobody would ever get anything out of reddit in such a situation

Diana Moon Glampers said:
No they are not "volunteers." you can't volunteer your time for a for-profit organization.
This is not true at all. Tons of for profit companies have volunteers working for them in an unpaid volunteer capacity

Diana Moon Glampers said:
For-profit companies are not allowed to "suffer or permit" unpaid labor
Yes they are and many do

Diana Moon Glampers said:
It's literally illegal to use free labor as a for-profit company, even if the people doing the work are stupid enough to sign up for it totally voluntarily
No it isn't illegal, its perfectly legal. See every mmo in existence as a prime example, as they almost all all have volunteer level programs for in-game moderator staff. Meridian 59 had the guide/bard program, UO has the counselor program and every other company that does this kind of thing has their own version of it. All of them are volunteers, all of their work is unpaid and they are very much for profit companies. Aside from that their forums are run almost entirely by volunteer moderators with a community manager overseeing them. Almost every company on the planet that has a forum or other social media involvement has volunteer staff moderating them

In fact you'd be very hard pressed to find many industries that involve work with the public that don't employ unpaid volunteers in some capacity. Even nursing homes use them
 
Thats not going to happen. Its not worth the money or the effort and nobody would ever get anything out of reddit in such a situation


This is not true at all. Tons of for profit companies have volunteers working for them in an unpaid volunteer capacity


Yes they are and many do


No it isn't illegal, its perfectly legal. See every mmo in existence as a prime example, as they almost all all have volunteer level programs for in-game moderator staff. Meridian 59 had the guide/bard program, UO has the counselor program and every other company that does this kind of thing has their own version of it. All of them are volunteers, all of their work is unpaid and they are very much for profit companies. Aside from that their forums are run almost entirely by volunteer moderators with a community manager overseeing them. Almost every company on the planet that has a forum or other social media involvement has volunteer staff moderating them

In fact you'd be very hard pressed to find many industries that involve work with the public that don't employ unpaid volunteers in some capacity. Even nursing homes use them

FLSA says this is illegal, and the potential for damages is huge. No, nursing homes and hospitals can't just use volunteers for any old thing, though nursing homes in particular have a small exception carved out for people doing things like reading to old people. You can't volunteer at a nursing home to do part of the work that is normal in a nursing home...you can't volunteer to clean out a bedpan, for instance.

Those MMOs are all playing with fire, too, and it's going to be very funny to watch the cases start. I promise that the language in FLSA is very clear and companies including hospitals get hit with this all the time. Lawyers are just now catching on, and yes, a couple of them are already working on these very cases. It isn't legal and it's not going to last, basically it escaped scrutiny until now because it's only recently that lawyers who work on stuff like this have been savvy about online anything.
 
Why are they are pushing so hard for advertisement? I imagine most of Reddits user base will be leftists who hate ads and will use adblock. Reddit isn't like social media where it's full of a bunch of normies that think the internet is real life.
It's going to be so funny when all the reddit jannies end up getting paid from the class action lawsuits.

No they are not "volunteers." you can't volunteer your time for a for-profit organization. For-profit companies are not allowed to "suffer or permit" unpaid labor. It's literally illegal to use free labor as a for-profit company, even if the people doing the work are stupid enough to sign up for it totally voluntarily. It undercuts the real labor market. A huge part of why (for instance) news companies have no ability to compete with reddit for readership in their forums is that they have to actually pay employees to moderate. It creates an unfair environment for competition.

Reddit janny should be compensated minimum wage. It should become the new thing parents talk about instead of McDonald's when they want to imply their child is making decisions that will ruin their life.

"C- in algebra?! You have so much more potential than this. Keep this kind of thing up and the only job you'll be able to get is Reddit janny. Is that what you want from life? Just asking people if they want updoots with that, all day long?! Your father and I sacrificed so much for you."
That would be nice but it's not the 1990's or early to mid 2000's anymore. Most "kids" don't work. It's people in their 20's and 30's doing those McJobs now. Even some older people. Threatening a kid with having to work at McDonalds isn't going to do much these days. They know they will most likely end up there anyway or some other low paying shitty service job. Being a Reddit moderator might seem like an upgrade.
 
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Diana Moon Glampers said:
FLSA says this is illegal, and the potential for damages is huge.
No it isn't. As evidenced by the fact a huge percentage of companies do it and have never and will never have a problem. and nursing home volunteers do plenty of things that regular staff do, perfectly legally and have since long before either of us were born

Diana Moon Glampers said:
Those MMOs are all playing with fire, too,
No, they're not. They've been doing it just fine and perfectly legally for more than 30 years at this point. This includes every big name company in existence up to and including EA, microsoft, 3DO when it was still a thing and sony. Funny how their legal departments don't have any issue with it if its totally illegal and asking for a lawsuit

Diana Moon Glampers said:
and it's going to be very funny to watch the cases start.
There won't be any cases because they are breaking no laws and have been doing this just fine for over 30 years. The only issue any mmo company ever had on this matter was a lawsuit relating to what amounted to telling volunteers to do overtime with said volunteer counselors and it was thrown out of court with the court explicitly stating the company had done nothing wrong. They even complained about being told to train their paid for employee counterparts in said court case and were told that was perfectly legal as well

Diana Moon Glampers said:
Lawyers are just now catching on, and yes, a couple of them are already working on these very cases. It isn't legal and it's not going to last,
Its going to last just fine because its perfectly legal. Nobody is 'just catching on' to actions companies have been doing openly for over 30 years without any issues and that most companies on the planet have been doing for far longer. Go ahead and sue everybody using volunteers to moderate their forums while you're at it and see how that goes for you. You'll get laughed out of court

Diana Moon Glampers said:
basically it escaped scrutiny until now because it's only recently that lawyers who work on stuff like this have been savvy about online anything.
Funny, that case I mentioned was over 20 years ago now and the company won it and was explicitly told what they were doing was legal by the court
 
Why are they are pushing so hard for advertisement? I imagine most of Reddits user base will be leftists who hate ads and will use adblock. Reddit isn't like social media where it's full of a bunch of normies that think the internet is real life.
Because people have been spending the better part of 30 years trying to "monetize" the internet with ad revenue, because a bunch of snake oil salesmen consultants in the 90's told them that instantly having access to the views of millions of people worldwide would make it the perfect advertising space that would practically print money. The entirety of the tech sector and all of its VC funding - this giant, 30 year long bubble - has been based entirely on this false promise. 30 years later and there's still no sign of profitability, and so the advertising and payment processing people have been angrily lashing out by demanding ever more censorious and draconian content moderation in order to make online platforms "safe" for their fucking kitchen ware and boomer medicine adverts, even as 90% of web users ignore or block them. The sooner the whole fucking fraudulent shell game goes tits up and these assholes get taken to the cleaners, the better.
 
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