How to invest in Reddit BEFORE the IPO

Reddit is an online discussion platform that allows its users to post (images, videos, links, …), comment and vote (up/down votes) according to the community’s interest. Within the forum, you have “subreddits”, specific groups for certain areas. A few examples include r/wallstreetbets, r/eupersonalfinance or, more generic, like r/music.

From our experience, Reddit is filled with thousands of “high-quality” people meaning that you can create deep discussions about any topic with a very vibrant and fast-paced culture and community. Besides, it is easy to always be up-to-date on a particular case of your interest without searching different sources since most users upload new updates every time.

For the most part, Reddit makes money through advertising. Besides, it generates revenue with an ad-free premium membership plan (Reddit Premium). Also, it earns some money by selling virtual coins that you can use to reward your favourite contributors (Reddit Coins).

There is no official date yet. However, since Reddit has filed for an IPO with the Securities and Exchange Commission (SEC) in December 2021, we may expect it to be on the stock exchange in the next six months.

On its last round of financing (August 2021), Reddit managed to be valued at $10 billion after a $410 million investment from Fidelity Investments.

For the IPO, it is aiming for a valuation of over $15 billion. The company is expected to use the new funds to improve product features, making it easier for newcomers to explore and quickly understand the site and build a self-service advertising system, which could help appeal to small and medium-sized businesses.

Yes, you can order Reddit shares before the IPO. This is known as a “pre-placement.” In theory, several brokers may allow you to do just that. However, the only one which has already announced it will make an effort to give access to Reddit IPO is Freedom24.

Among other brokers, TradeStation has not announced if and when it will become available but seems open to it since they offer access to US IPOs. Please take a look at both:

1# Freedom24

Founded in 2008, Freedom Finance, the official company name of Freedom24, has already offered to its 400,000+ worldwide clients participation in 280+ IPOs, including 40,000+ trade stocks, 1,500+ ETFs, 1,000+ US Stock Options, and 147,000+ bonds on the largest exchanges in Europe, Asia, and the US.

With Freedom24, the process to participate before the IPOs feels incredibly straightforward:

1. Open an account with a minimum of 2,000 USD (the minimum for an IPO request);
2. Submit a request for the available IPO stocks before their respective IPO dates;
3. Freedom24 automatically credits your account with those shares purchased by them on your behalf (“oversubscribed” IPOs may make it difficult for your orders to be filled completely);
4. Sell your stocks after the 93-day lock-up period or purchase a forward sale contract through Freedom24 to lock your gains before the 93 days period.

To invest in Reddit’ IPO, you will technically become a Freedom Finance client. Nothing to worry about here, that’s simply the name of the broker running the platform Freedom24. 

Want to know more about Freedom24? Check our Freedom24 review.

2# TradeStation

Founded in 1982, TradeStation is a US broker committed to offering you the best trading experience within their rewarded platforms and brokerage services. You can trade stocks, ETFs, options, futures, and crypto with competitive pricing models.

With TradeStation, you must follow these steps:

1. Open an account with a minimum of 500 USD;
2. Download the ClickIPO app (Available both on iOS and Android);
3. Register on ClickIPO’s trading platform and select TradeStation as your broker;
4. Link your TradeStation account in the “My Account” section of the ClickIPO app

For US residents, you have zero commission trades (including the IPO stocks). For international investors, please consult their pricing here.

There is no guarantee that TradeStation will offer Reddit’ IPO, still, the optionality is there. We encourage you to follow the company and wait for their official announcement. After that, ask TradeStation if they will offer it.

One thing is to enjoy the platform, another is how it might play as an investment. A good service is not necessarily a synonym of a good investment. The idea is not to discourage you from investing in the IPO Reddit but to help you make a good assessment of the investment opportunity.

If you anticipate an increase in daily active users in line or better than the company forecasts, an investment at this stage might be a good idea since Reddit still lags behind its competitors.

At the time of this writing, the information is still vague, and investors are in a wait-and-see mode. In the meantime, more stocks analysts will give their opinion, the prospectus will be fully released, and the decision to enter this IPO will be much easier to make!

If you have any questions, feel free to leave a comment below.

Happy investing!