Mar 21, 2024 - Business

Reddit CFO says "tens of thousands" of users bought IPO shares

Reddit alien mascot at the New York Stock Exchange

Photo: Michael Nagle/Bloomberg via Getty Images.

Reddit believes having an IPO in registration for more than two years "was one of the best things that's happened to the company," chief financial officer Drew Vollero told Axios, shortly after shares began trading.

Why he matters: Vollero is no stranger to social media IPOs, having served as CFO for Snap when it went public in 2017.

Here are three excerpts from our conversation:

1. Tens of thousands of Redditors bought into the IPO, although the company isn't disclosing more specifics.

  • "We set aside 8% of the shares so that our moderators and passionate users can be owners ... It's been good to have some pop for them on Day 1 because that's different from what's happened with some other companies." (Ed note: Uber, for example, offered IPO shares to drivers but the stock sank on its first day of trading.)
  • "We had thousands, actually tens of thousands, of people participate in our [direct stock purchase] program, but we can't say who got what share of the IPO, in terms of retail investors or users."

2. On the value of having first filed in late 2021, whereas most companies file just a couple of months before listing:

  • "Reddit is a much better company in 2024 than it was in 2022. The business is bigger, the team is more cohesive, and we're much more mature on processes.
  • "For example, we've had the benefit of being able to practice earnings calls for eight quarters with our syndicate. Steve [Huffman] has written CEO scripts and I've written CFO scripts, and we write public filings even though they're nonpublic. These are great muscles to build."
  • "We've also gotten to meet with investors many times over the last couple of years, so the people we were able to choose for our IPO have a much better understanding of our stories than I've seen out of another shareholder base."
  • "One challenge is that we had to manage employee expectations, because they got their hopes up in 2022, but I think they're all pretty happy today."

3. Reddit is not worried that selling or licensing user data to AI companies will eventually cannibalize its advertising revenue.

  • "We're not looking at AI as a threat, we're looking at it as a way to make our business better. Not only in terms of how we're starting to monetize now, but also within the actual product. For example, we're using AI to translate Reddit's corpus into other languages in other geographies."
  • "Another example is that a significant number of first-time user posts get taken down, maybe because they inadvertently broke a rule like they were mean-spirited or told a joke in a subreddit that doesn't allow jokes. We're working on an AI application that will coach you through the post."

Go deeper: Reddit shares soar in their debut

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