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A social media platform is set to hit the stock market this week, but some users are worried about what will happen to the site once it goes live.
Reddit is seeking a valuation of up to $6.4 billion in its initial public offering, according to regulatory filings.
The company plans to offer about 22 million shares at prices ranging from $31 to $34 per share, which are expected to hit the public market on Thursday, according to Market Insider.The company offered shares to some users prior to the public offering.
This is the first initial public offering from a social media platform since Pintrest in 2019. The stock price remained mostly flat for the first few months, but it recorded its first significant rise at the end of June.
Users across the site expressed concerns about the company managing the site being made public and the impact it would have on the platform.
Users are worried about IPO
The platform's user base is drawn to communities formed around niche topics that are managed by volunteers.
“It has to be the job of community members to manage a small community. It's hard to imagine anyone volunteering to help Facebook or Microsoft or any other multi-billion dollar publicly traded industry.” says Reddit user and science fiction author Nathan Green. the fantasy author told USA TODAY.
The company agreed with Green in a regulatory filing, saying that “the majority of content on our platform comes from a small number of Redditors who contribute to the community.” Bloomberg Opinion's Dave Lee said the risk component of Reddit's regulatory findings is twice that of Twitter and Facebook combined.
“Users are not married to the platform. Facebook has me in a friend group. Mainly on reddit I'm screaming into the air. The reward is 100 upvotes,” Green wrote in The Verge article. said in the top reaction in the thread. IPO. “It's available everywhere else. There's nothing special about this platform compared to other platforms.”
Other users posted concerns that the IPO would cause the site to become poorly run in search of profits.
“Changes are made because they are controlled by Reddit Inc.” intention It happens according to Reddit's objective of making money,” user u/nihiltres posted in the thread of the Rooters article announcing the service.
In a Reddit chat with USA TODAY, u/nihiltres, who has had the account since 2011, said changes were made to the site prior to its launch that made it difficult to use.
“They're adding some visual polish to the site, but that doesn't necessarily equate to improving the user experience,” said u/nihiltres. “I feel like I'm in a hurry.”
USA TODAY contacted Reddit about the user's concerns but did not receive a response.
Technology IPOs do not guarantee success
The recent track record for tech company IPOs has been mixed.
- Uber stock struggled on its first day of trading in 2019, opening at $42 and closing at $41, well below expectations of $45. Since then, the stock has been on a roller coaster, hovering around $20 in June 2022 and hitting a high of $81.03 in February 2024.
- Etsy went public in April 2015 at $31, but fell below $10 in November.
- Robinhood faced similar negative sentiment as Reddit during its IPO in the wake of the GameStop stock phenomenon, which originated on the platform's WallStreetBets subreddit. When it debuted in July 2021, the stock fell as much as 10% on its first day of trading and closed down 8%. In August, it was raised to $55, but in November it fell below the public price of $38, which will reach the mid-teens in early 2022.