Sarah Gilbert spends a lot of time on Reddit. For the past three years, she’s helped moderate the r/AskHistorians subreddit, which has 2 million members and was the subject of her Ph.D. dissertation. She’s been a lurker on the forum since 2012.

But when the subject turns to Reddit’s upcoming IPO, Gilbert’s excitement wanes. The 19-year-old social media company set aside 8% of the shares in its offering for certain users and moderators, along with some company insiders and their friends and family members. Airbnb, Rivian and Doximity employed a similar model when they went public, as a way to reward power users or early customers.

Reddit’s initial public offering is different. While its predecessors hit the market during a record IPO stretch in 2020 and 2021, Reddit’s planned New York Stock Exchange debut this week will be the first major tech offering of the year, and lands after a major reckoning in the industry that was highlighted by tumbling valuations, reduced investment and an emphasis on profit over growth. The two venture-backed tech debuts of 2023 — Instacart and Klaviyo — failed to pop, a sign that getting in at the IPO price no longer equals free money.

It’s not just market conditions that have Reddit moderators like Gilbert forgoing the investment opportunity. Reddit has long had a rocky relationship with moderators and the site’s most dedicated users, or Redditors. Following a user protest last year stemming from a policy change that forced some third-party developers to pay more for use of the company’s application programming interface (API), Reddit CEO Steve Huffman compared site moderators to “landed gentry.”

Gilbert, who works as a research manager at Cornell University’s Citizens and Technology Lab, said the bad blood from the conflict has “really sort of knocked a lot of the goodwill and the energy” from those who had been spending the most time and effort on trying to build up communities on the site. It’s hard for her to now see the appeal in paying money to own a piece of the company and betting on its future.

“It’s like, OK, you’ve invested your time, you’ve invested your emotional well-being and put yourself at risk, now invest your money into this platform too,” Gilbert said. “It doesn’t really feel like Reddit is necessarily giving back, so much as it feels like maybe it’s asking for even more.” 

Reddit, a site with 60,000 daily active moderators hosting forums on topics from the mainstream to the extremely obscure, plans to sell shares at $31 to $34 a piece in its IPO, potentially valuing the company at around $6.5 billion, and trade under ticker symbol “RDDT.” At the tech market peak in 2021, Reddit was valued by private investors at $10 billion, according to PitchBook.

Reddit’s directed share program, or DSP, is intended for certain U.S.-based users with high site-wide reputations — measured in so-called Karma points — or for moderators, as a way to “recognize those who have contributed significantly to Reddit over the years,” the company said in explaining the offering. In total, Reddit said underwriters have reserved 1.76 million of the 8 million shares in the IPO for the DSP.

Some invitees say they’re worried about the company’s financial situation. Reddit recorded a net loss of $90.8 million last year, an improvement from 2022, when its deficit came it at $158.6 million. The company said in its prospectus that it’s racked up a cumulative loss of $716.6 million.

Reddit is competing for advertising dollars in a notoriously difficult market against the likes of Google and its YouTube service, Facebook‘s apps and TikTok. In its filing, Reddit also names as competitors Wikipedia, Snap, X, Pinterest, Roblox, Discord and Amazon’s Twitch.

A moderator with username BuckRowdy, who spoke on condition that his real name not be disclosed, told CNBC that he’s passing on the IPO, and said his sentiment appears to be widely shared.

“People do seem to have like a negative view that it’s going to go down immediately or you’re going to lose money,” said BuckRowdy, who moderates subreddits including r/UnresolvedMysteries and r/TrueCrime. “I don’t see anybody in any spaces I’m in that are taking it seriously, that are thinking of it as an investment or anything along those lines.”

Reddit didn’t provide a comment for this story.

The site is home to the infamous r/wallstreetbets subreddit that helped spur the 2021 boom in meme stocks like GameStop and AMC Entertainment, which rose with meteoric speed despite any changes in their business fundamentals.

It’s a risk the company acknowledges in its IPO filing:

Joshua White, an assistant professor of finance at Vanderbilt University, said Reddit’s DSP could be “nice stocking stuff” if it were to follow the lead of companies that went public in 2020 and 2021.

“This is usually a good deal because really hot IPO stocks typically go up on the first day,” White said.

However, given the dearth of tech IPOs since the start of 2022, White said Reddit’s offering is “probably a little more risky.”

While there’s plenty of skepticism heading into the IPO, some Redditors appear poised to get in on the action, based on forum commentary.

A Reddit user with the handle FormicaDinette33 said in the r/RedditIPO subreddit that they plan to purchase 10 shares “just to experience the process,” while SpindriftRascal plans to spend $5,000, an amount allowing them to “to be happy if it does well and not care much if it tanks,” according to a post.

Sweatycat, a moderator of the r/IAmA and r/LifeProTips subreddits, plans to participate in the IPO, telling CNBC they “both like Reddit as a company and see this as a potentially good investment opportunity.” The Redditor, who asked not to be identified further, said other moderators may have “mixed feelings” about Reddit going public because of their “strained relationship” with management.

For wrestlegirl, who moderates the AEWOfficial subreddit for over 100,000 wrestling fans, the stock purchase program is “a nice enough thing to offer, but it’s not a reward of any sort” and doesn’t project to be a “long-term stable investment.”

Wrestlegirl, who also asked not to be named, told CNBC that owning the stock may be “something fun to have or an amusing experience to talk about later, but I don’t think anyone is actually taking Reddit’s public offering seriously.”

For roughly five years, Maharaj has helped moderate the forum r/Equestrian, consisting of 72,000 horse lovers. He’s also a member of the Reddit Mod Council, a select group of power users who gather with the goal of improving the site and, in his words, to “make decisions that are in everyone’s interest.”

“Our track record there is mixed,” Maharaj said, with a chuckle.

Even though he’s dubious about the IPO and not particularly bullish on the stock, Maharaj said the DSP could be a “very shrewd” way for management to invite participation and fend off any effort by the Reddit community to spoil a major moment in the company’s history.

“Had they not done that, there would have been a heightened risk that more Redditors would have rhetorically run down the stock as it goes to market,” Maharaj said. The company is saying, “Look, buy some shares and you might make money, but you only make money if you don’t do something to disrupt the IPO itself,” he said.

Wrestlegirl said that despite the swarm of negativity she’s seeing among moderators, she thinks a decent number of them will participate in the IPO.

“It’s being mocked so much it’s almost a meme,” she said. “I think a lot of those jeering secretly don’t want to be left out of things if this turns into a GameStop.”

Courtnie Swearingen says she won’t be one of them.

Swearingen, an attorney, has been a Reddit moderator for about 13 years, currently for forums on music and on her hometown of Chicago. Over that time, she’s built up a distrust of the company. In 2015, after the controversial firing of a Reddit employee named Victoria Taylor, hundreds of moderators locked their subreddits in a protest effort led by Swearingen.

Swearingen told CNBC that after that ordeal, Reddit flew her and other moderators to San Francisco to collect feedback and to clear the air. But she hasn’t seen much change for the better, and no longer expects it.

“Every time anything is promised, or new ideas are presented, it’s never done well and it never goes well,” Swearingen said. “Even with the opportunity to buy in, I would not. I cannot risk money on a company that I haven’t been able to trust for a decade.”

— CNBC’s Cameron Costa contributed to this report