How to Buy Reddit Stock
Looking for ways to invest in Reddit? While Reddit plans its IPO for March 2024, you can still get ahead and buy your Reddit shares. Check this out.
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Investing in Reddit can potentially increase the value of your portfolio and give you access to a growing market.
But how do you invest in the platform? How do you capitalize on Reddit's success?
In this guide, learn more about how you can buy Reddit stock. Keep reading to see how.
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What is Reddit?
Reddit is a popular social media platform and discussion website. It's a community of anonymous users who get to discuss anything under the sun.
Reddit has about 48 million active users in the US this year. This is an increase of 5.22% from 2022. It is also expected to reach 53 million by 2025. [1]
With a vast amount of users, investing in Reddit appears to be a smart investment decision. Then, how do we invest in it?
Can you buy Reddit Stock?
No, Reddit stock is not available yet because it's still a privately held company. It's not yet traded on any public stock exchange, so you cannot buy directly through an online brokerage.
But Reddit's initial public offering (IPO) may be coming out soon. It already submitted IPO paperwork to the Securities and Exchange Commission in 2021, and the IPO is anticipated to begin in March 2024.
So how can you invest when Reddit goes public? Read on.
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How to Invest in Reddit's IPO
Some brokers let investors participate in IPOs. However, shares may be limited and there is no allocation guarantee.
So if you want to invest before Reddit's IPO hits, have an account ready on one of these platforms and meet the requirements:
- Charles Schwab: Have a minimum balance of $100,000 and a trading history of at least 36 trades.
- E*Trade: No trading history or account balance requirements. Simply complete an eligibility questionnaire.[2]
- Fidelity: Must be in the Private/Premium client groups or meet a household asset minimum.[3]
- TD Ameritrade: Be part of the selling group and meet specific criteria - 30 trades in the last 3 months or a minimum account balance of $250,000.[4]
When participating in an IPO, you may have options to sell the acquired shares after a lockup period, usually lasting 60 or 90 days.
However, there is no assurance of yielding a profit. It's important to consider the restrictions before investing.
There is no stock price for Reddit yet because it is not yet listed on the stock exchange. It will be released together with the stock symbol once it goes public.
How to buy Reddit before the IPO Date
Secondary platforms may offer pre-IPO shares to accredited investors. These are from employees who have received stock as compensation packages.
Stock prices in secondary platforms are usually set through seller-buyer negotiations. Here are simple steps to access secondary platforms.
- Sign up online with your chosen platform (Example: EquityZen)
- Undergo verification of your accreditation
- Once verified, you can browse available offerings
- Fund your account and buy shares
Remember, requirements may differ among marketplaces. The minimum investment is also high (for example, EquityZen requires a $10,000 minimum).[5] And usually, they're only open to accredited investors.
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Equitybee gives accredited investors access to high-growth, VC-backed startups. By funding employee stock options, accredited investors can gain investment exposure to private companies at past valuations. In exchange for funding the options, you will receive a percentage of future proceeds from any successful liquidity events. Subject to availability. Investments involve risk; Equitybee Securities, member FINRA
How to Indirectly Invest in Reddit stock
You can also indirectly gain exposure to Reddit's stocks.
One option is to invest in Reddit's publicly traded investors like Tencent Holdings. Another is to look into their company partners, such as Pinterest.
- Tencent Holdings Limited (TCEHY)
Tencent Holdings Limited is considered one of China's Tech Giants. They run WeChat - China's top social and messaging app. And they are also known worldwide for their mobile games, such as Honor of Kings.U.S. investors can buy Tencent stock through American Depositary Receipts (ADRs), which are traded on the over-the-counter (OTC) market. Tencent is also included in ETFs, such as KraneShares CSI China Internet ETF (KWEB), which comprises China's largest internet companies.
- Pinterest (PINS)
One potential company to consider is Pinterest. Reddit and Pinterest have similar uses. Both platforms offer a way for users to discover new content and ideas.Pinterest was founded in 2010 and went public on April 18, 2019. As of 2023, the company's market capitalization reached $15.74 billion[6] and approximately 463 million users,[7] or "pinners." Pinterest's net worth as of March 2023 is $17.08 billion.
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When is Reddit's IPO Date?
Reddit is getting closer to its long-awaited IPO.
The company filed with the Securities and Exchange Commission (SEC) in 2021. Goldman Sachs and Morgan Stanley were selected as lead underwriters for the IPO. JP Morgan Chase was also expected to play a role in the offering.
Other details, such as the number of shares on offer, price range, and projected IPO date, are still unknown.
Some experts project Reddit's valuation of up to $15 billion.[8] Market analysts believe any IPO schedule likely depends on market conditions. It must be favorable enough to ensure maximum shareholder returns.
Reddit's steady growth attracts more investors and increases their interest.
Reddit has no stock symbol yet because it is not publicly traded. Once it goes public, the stock symbol will also be released.
What is Reddit's valuation?
Reddit has raised $1.3 billion in 10 financing rounds.[9] The August 2021 funding round was remarkable. It raised $410 million and valued Reddit at $9.6 billion.[10] [11] This growth increased Reddit's fame and potential for expansion.
Thirty-one investors have supported Reddit since its inception, including Fidelity, Sequoia Capital, Tencent, and Andreessen Horowitz. These notable names also appeal to other investors.
Reddit continues to expand its services, covering a broader market. It aims to hit both the advertising and e-commerce sectors. Most investors see Reddit's growth as a potential for long-term investment.
Reddit is a great company. But who owns it? Read on.
Who owns Reddit?
Advance Publications, a media company is among the largest shareholder in Reddit.[12] It also owns Condé Nast, a publishing company famous for renowned magazines like Vogue and The New Yorker.
Advance Publications acquired a majority stake in Reddit in 2006. However, Advance has allowed Reddit to operate freely. This preserved their unique culture and community-driven nature.
Bottom Line
Reddit is not publicly traded. It has started filing for its IPO; the official announcement is anticipated to occur in March 2024.
But while waiting for its IPO, other ways are available to buy its shares.
You can check secondary platforms to see if stocks are available. Or you can also indirectly invest through Tencent and Pinterest.
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Take note of the risks in investing in private companies like Reddit. There is limited access to company financial statements.
Always do your research or seek professional advice before investing in secondary platforms.
References
- ^ Statista. Reddit Statistics, Retrieved 04/28/2023
- ^ E*TRADE. FAQs: What are the participation criteria and eligibility requirements?, Retrieved 4/29/2023
- ^ Fidelity. How to Participate in an Initial Public Offering (IPO), Retrieved 4/29/2023
- ^ TD Ameritrade. FAQs: What are the eligibility requirements to trade IPOs?, Retrieved 4/29/2023
- ^ EquityZen. FAQ: What's the minimum investment size?, Retrieved 4/29/2023
- ^ Google Finance. Pinterest Inc, Retrieved 4/29/2023
- ^ Pinterest Your audience is here, Retrieved 4/29/2023
- ^ Bloomberg. Reddit Urged to Target $5 Billion Valuation: Sources, Retrieved 2/21/2024
- ^ Forge Global. Reddit IPO, Retrieved 2/21/2024
- ^ SEC. Reddit, Inc. Notice of Exempt Offering of Securities, Retrieved 2/21/2024
- ^ Reddit. Reddit Secures Funding to Continue Growth Plans, Retrieved, 2/21/2024
- ^ Advance Publications. About Advance, Retrieved 2/21/2024
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