Redditors bank millions as a group on stock’s opening day

Reddit power users who participated in the company’s IPO made millions of dollars as a group in profits after the stock’s big jump in its first day on the market.

While Redditors interviewed by CNBC ahead of the offering said they were skipping out on the IPO due to concerns about the business and the company’s often fraught relationship with moderators, Chief Financial Officer Drew Vollero told Axios that tens of thousands of users ended up purchasing shares.

The stock jumped 48% in its debut on Thursday, closing at $50.44, up from the $34 offer price.

Certain Redditors — along with company insiders and their friends and family members — were able to join the initial public offering through the company’s directed-shared program, or DSP. It’s a model that was used by companies like Airbnb, Rivian and Doximity to reward their loyal users and customers.

Of the 22 million shares that Reddit and existing stakeholders sold in the offering, some 1.76 million were made available through the DSP, equal to 8% of the deal. The shares were offered based on a user’s reputation, measured through what the company calls karma.

Because Reddit’s DSP doesn’t have a lockup period, participants could immediately sell shares, unlike company insiders and early investors, who have to wait about 180 days. The stock shot up as high as $57.80 shortly after the IPO, and some users said they sold after the early rally.

One Redditor with the username LearnedButt claimed on the r/RedditIPO forum to have made a profit of $20,000 after the initial pop. The user said they sold the stock at $54 a share.

“Even if it goes to 100/share, I’m cool and feel not an ounce of FOMO,” LearnedButt wrote, using the acronym for fear of missing out. “This is 20K I didn’t have an hour ago.”

In a reply to LearnedButt, Reddit user friskevision wrote, “Although I didn’t invest as much as you, I did make a quick $1,500. Reddit finally pays me back for those years of using it. :)”

Meanwhile, the user blackberrydoughnuts expressed regret for selling too late after the shares dropped below $50.

“I sold my 1000 shares at $48 and I’m sad I didn’t sell earlier when it was at $54!” blackberrydoughnuts wrote. “I really should have!”

Redditors used E-Trade to purchase shares via the DSP, which was only available to U.S. residents.

Reddit user Reepicheepee made a small investment in the shares.

 “Just sold 15 at $50,” Reepicheepee said. “I saw the price dropping and decided to cash in. Small net of $250, though! I’ll continue watching the price throughout the day to see if I made the right call …”

Though some Redditors were out to make a quick buck, others like follysurfer plan on becoming long-term Reddit shareholders.

“Got 20 shares,” follysurfer wrote. “Guess I’ll hold them for 20yrs and see what happens.”

Stock chatter on Reddit is a familiar subject and one of the reasons the site is so well known.

The Wallstreetbets subreddit also became known known for its role in helping spawn the 2021 meme stock boom and the meteoric rise of stocks like GameStop and AMC Entertainment.

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

“That’s the beautiful thing about Reddit, is that they tell it like it is,” Huffman said. “But you have to remember they’re doing that on Reddit. It’s a platform they love, it’s their home on the internet.”

Redditor erjo5055 said in the Wallstreetbets forum, “Guess using this site for nearly 10 years has finally paid off. I’m sad I didn’t buy more shares, was going to buy 2x as many.”

The Reddit user Galactic responded, “High-5, fellow 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 anyone who hasn’t yet sold.

“It will absolutely plummet tomorrow,” PatrickBateman-AP wrote.