You’ll need a whole lot of karma or moderator experience on Reddit if you want the chance to buy into the company’s stock at its IPO price ahead of its public debut.
Reddit’s IPO paperwork, which the company filed publicly on Thursday, outlines six tiers that the company will use to determine which of its biggest users will have a chance to buy its stock through its directed share program. The filing confirms an earlier report from The Wall Street Journal that the company plans to sell stock early to select Redditors at its IPO price in addition to larger money managers — an unusual move.
The first tier consists of “certain users and moderators identified by us who have meaningfully contributed to Reddit community programs,” Reddit’s S-1 filing with the SEC reads. The filing doesn’t say how many shares will be reserved for Redditors.
From there, Redditors will qualify for different groups based on their karma — a measure of how much a user’s posts and other actions on Reddit contribute to its message boards — or what they’ve contributed as a moderator.
Here’s the complete breakdown of those tiers:
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Tier 1, for “certain users and moderators identified by us who have meaningfully contributed to Reddit community programs”
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Tier 2, for users with at least 200,000 karma or moderators with at least 5,000 moderator actions in their past
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Tier 3, for users with at least 100,000 karma or moderators with at least 2,500 moderator actions
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Tier 4, for users with at least 50,000 karma or moderators with at least 1,000 moderator actions in their past
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Tier 5, for users with at least 25,000 karma or moderators with at least 500 moderator actions in their past
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Tier 6, for “all other eligible users and moderators,” according to the IPO filing
But qualifying for one of these tiers doesn’t promise anyone Reddit stock: If demand is great enough, Reddit will put eligible users on a waitlist, according to the filing.
The program is open to Reddit users and moderators who are US residents, at least 18 years of age, and who opened their account “on or before January 1, 2024,” the filing reads.
Up to 75,000 Redditors will have access to the directed share program in March, the Journal reported Wednesday.
Offering stock to users is an unusual strategy in the IPO world. But Reddit isn’t the first company to do it. Stock trading app Robinhood let its users buy up to 35% of its shares early in 2021.
Are you among the Redditors with enough karma or moderator actions to get in early on its IPO? Reach out to this reporter at abitter@insider.com
