Reddit’s Risky IPO: Users Express Concerns and Skepticism
Reddit, the popular online community, is gearing up for its initial public offering (IPO), but its users are expressing concerns and skepticism about the company’s future. The S-1 filing, which discloses important information about the business, has raised alarm bells among some Redditors.
One of the main concerns revolves around r/WallStreetBets, a subreddit known for its involvement in meme stocks. The fact that Reddit mentions this subreddit multiple times in its filing has led to speculation about the company’s intentions. However, Redditors themselves are not enthusiastic about the IPO. One user on r/WallStreetBets wrote, “Short the shit out of it. They have not proven that this user base or data set can be monetized.” Another user expressed their intent to bet against the stock, stating, “Loads puts into the put-cannon with malicious intent.”
But it’s not just r/WallStreetBets that is skeptical. On r/technology, users are speculating about the measures Reddit might take to make the company profitable, including banning certain subreddits or increasing ad load. There is also criticism of the directed share program, which allows top users to buy shares before the IPO. Some users view it as a scam and are upset that Aaron Swartz, a co-founder of Reddit, has been erased from the company’s history.
These concerns are not unfounded. Reddit has never been profitable, and its risk factors section in the IPO filing is longer than those of Twitter and Facebook combined. The company’s reliance on user-generated content and community moderation poses challenges in terms of monetization and control. While Reddit’s model of community moderation allows for a more intimate understanding of its users, it also means that the company has less control over its moderators.
To address these risks, Reddit is offering shares to power users through its directed shares program. By making these users shareholders, Reddit hopes to incentivize them to maintain the value of their shares by not engaging in actions that could harm advertising revenue. Some Redditors see this as a positive gesture of appreciation, while others view it as a gimmick.
However, the question remains whether Reddit can successfully monetize its platform. The company’s revenue primarily comes from advertising, but its laissez-faire approach to moderation has hindered its ability to attract advertisers. Additionally, user engagement on Reddit is not consistent, making targeted advertising more challenging.
In an attempt to diversify its revenue streams, Reddit has explored blockchain initiatives and sold non-fungible tokens (NFTs). However, these ventures have had mixed results, with many NFTs losing their value over time. This raises concerns about the viability of Reddit’s shares being offered to users.
Furthermore, Reddit’s CEO, Steve Huffman, has made questionable decisions in the past that have raised eyebrows among users. His handling of the API price increase and his association with board member Sam Altman, who siphoned off Reddit data for free, have caused discontent among Redditors. Huffman’s role in the company is seen as critical, but many users believe he is not effectively managing the platform.
Overall, Reddit’s IPO has generated skepticism and concerns among its user base. While Reddit is a beloved community known for its valuable content, its ability to monetize and sustain profitability remains uncertain. As the company prepares to go public, users are questioning the motives behind the IPO and expressing doubts about its future prospects. Only time will tell if Reddit can overcome these challenges and prove its worth as a viable business.
