The first invitations to participate in the Reddit Directed Share Program (DSP) – in which moderators and very active users will get preferential access to shares – have now been issued.
Some moderators and other users with high Reddit karma have been invited to register, but so far vocal users seem unimpressed …
Reddit IPO
Reddit last week formally advised that the company would be going public, offering shares through an initial public offering (IPO).
The company has been preparing for this move for a considerable time now, with two of its most controversial decisions clearly intended to maximize revenue in order to attract investors.
Most notoriously, Reddit started charging large fees for use of its API, which led to the demise of the hugely popular third-party app Apollo. That led to wide-scale protests, which the company had to forcibly shut down.
More recently, Reddit announced a controversial deal to sell access to user-generated content to Google.
The Directed Share Program (DSP)
In what some are seeing as an attempt to placate moderators and long-time users upset at the company’s efforts to maximise its value, Reddit has announced that they will be given an opportunity to buy shares ahead of everyone else. This is known as the Directed Share Program (DSP).
The first tier of those eligible for the program have begun receiving their invitations to register their interest, and told that they will be able to buy shares one day before the IPO. This kind of privilege is normally reserved for large institutional investors.
The first group to be invited are those who have 5,000+ moderator actions, or at least 200,000 in Reddit karma. The company says that the rollout will extend in phases to those with 500+ moderator actions, or 25k karma.
But vocal users unhappy
However, Wired reports that the DSP isn’t necessarily succeeding at winning people over. Some of those invited to participate see it as a risky deal, given that the company has never turned a profit.
Even these users are skeptical about the company’s prospects. The nearly 19-year-old business has never made a profit and lost $91 million last year.
“Reddit has a very rocky history,” says Alex Cook, a volunteer moderator (or “mod” in the community’s lingo) for several gaming subreddits. “I see it as a very risky investment at best.”
Other users disparaged the offer in private chat rooms for mods. “Reddit already f*cks us over enough, now they want us to pay for it as well,” one wrote […]
IPO shares won’t soothe lingering frustration, says a user who goes by Rat and volunteers as a mod for the r/StardewValley video game community. “I guess this could be their attempt at the ‘pizza party,’” Rat says, referring to a conciliatory gesture commonly offered to children.
Others are upset that they won’t be included, with non-US moderators among them.
Another potential source of trouble is the subreddit r/WallStreetBets. Members caused chaos when they started investing heavily in GameStop in order to drive up the share price. This was done to profit from professional investors who had shorted the company and were then forced to buy stock at the inflated price to make good their position.
Reddit had already noted potential action by members as a risk factor in the IPO, and Wired reports that there is already talk of shorting Reddit stock to drive down the price as soon as the shares go on sale.
Image: 9to5Mac collage of images by Reddit and Luke Chesser on Unsplash
FTC: We use income earning auto affiliate links. More.
Comments