Reddit power users balk at chance to participate in IPO as Wall Street debut nears
Jonathan Raa | Nurphoto | Getty Images
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 founders Alexis Ohanian (L) and Steve Huffman (R)
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.
Meme stocks
Of all companies, Reddit knows something about stock market volatility.
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:
“Given the broad awareness and brand recognition of Reddit, including as a result of the popularity of r/ wallstreetbets among retail investors, and the direct access by retail investors to broadly available trading platforms, the market price and trading volume of our Class A common stock could experience extreme volatility for reasons unrelated to our underlying business or macroeconomic or industry fundamentals, which could cause you to lose all or part of your investment if you are unable to sell your shares at or above the initial offering price.”
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.”
‘It’s being mocked so much’
Akaash Maharaj is ineligible for the program as a Canadian resident. He said he would decline an invitation to participate even if he could, largely because of concerns about the business. He also says moderators shouldn’t be motivated to improve the company’s share price at the expense of the “long-term identity of the platform.”
“There are very few Redditors who I would say are enthusiastic about the IPO,” Maharaj told CNBC.
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
Technology
Google investors have big expectations after stock’s sharpest quarterly rally in 20 years
Google CEO Sundar Pichai waves as he arrives to attend the Artificial Intelligence (AI) Action Summit at the Grand Palais in Paris, France, February 11, 2025.
Benoit Tessier | Reuters
Alphabet has a high bar to clear when it reports earnings Wednesday.
The company’s stock price soared 38% in the third quarter, its best quarterly performance in two decades. It’s continued to rally, climbing 11% so far in October, closing at a record on Monday.
With revenue growth stuck in the low teens of late, and expected to come in at 12% next year, investors have recalibrated their expectations after witnessing speedier growth in the years before the 2022 slowdown. Much of the recent optimism centers around Google’s improved position in the artificial intelligence race.
However, the biggest catalyst for the stock in the third quarter had more to do with Google’s relative weakness in AI, compared with its standing in online ads.
Alphabet vs. Nasdaq
Alphabet shares soared in early September, when Google avoided the worst-case scenario in its search antitrust case. Following the government’s victory in its case against the company last year, U.S. District Judge Amit Mehta ruled in the remedies decision last month that Google would not be forced to sell off its Chrome browser, but must share data with competitors.
Mehta said that the rise in AI services from companies like OpenAI has created plenty of new competition in search. Backing up his point, OpenAI last week unveiled ChatGPT Atlas, an AI-powered browser that could directly challenge Chrome.
While investors immediately cheered Mehta’s ruling, Google now has to show that it’s a force in AI, which is serving as the growth engine for the tech sector. Google’s cloud unit benefits from the AI boom as companies count on the technology for running large language models and expanding workloads. And Google is heavily investing in Gemini, its family of AI models, products and services.
Over the weekend, analysts at KeyBanc Capital Markets raised their price target on Alphabet to $300 from $265, expecting that third-quarter results will “show that faster product velocity is driving momentum in Search, Cloud and Waymo,” its autonomous vehicle business.
The stock pop, the analysts wrote, is due to “a combination of the DOJ Search remedies trial being more favorable than expected and more signs of progress in AI across business units.”
Alphabet is scheduled to report results after the bell on Wednesday, alongside rivals Microsoft and Meta. Apple and Amazon report the following day.
Wall Street is expecting to see revenue growth of 13% to $99.89 billion and earnings per share of $2.26, according to LSEG.
‘The bite isn’t fatal’
When it comes to Google’s position in AI, some analysts see reasons for concern.
Bernstein analysts wrote last month after the remedies decision that Mehta’s comments about generative AI competing with search may be a red flag for investors.
“The bite isn’t fatal but it still stings,” wrote the analysts, who have the equivalent of a hold rating on Alphabet.
Mehta dedicated roughly 30 pages of the 226-page filing to explaining generative AI and the market as it exists today. He described the space as “highly competitive” and wrote that there have been “numerous new market entrants” with access to “a lot of capital.”
ChatGPT accounts for about 81% of the global AI chatbot market, according to September data from StatCounter. Perplexity is second at 11%, followed by Microsoft Copilot at 4.1% and Gemini at 2.8%, the firm said.
But Google is aggressively pushing Gemini as far more than just a ChatGPT competitor, and is taking advantage of its strength in various markets for distribution.
Earlier this month, the company launched Gemini Enterprise, targeting corporate clients with agents that perform specific work tasks. In September, Google announced it was rolling out Gemini in Chrome to Mac and Windows users in the U.S. as well as to mobile devices, allowing users to ask Gemini for help understanding the contents of a particular web page, work across tabs, or do more within a single tab, such as schedule a meeting or search for a YouTube video.
Google CEO Sundar Pichai said this month at Salesforce’s Dreamforce conference that Gemini 3, the latest version of the company’s AI model, will be released this year.
Analysts at Mizuho said in a report about the internet market last week that “competitive risks from OpenAI across the internet landscape, particularly at Google, have been topic #1” in more than 100 recent conversations with investors.
Still, they said that they see “competitive fears likely to recede as we refocus on fundamentals with earnings.” For Google, the “imminent roll-out of Gemini 3 could further tilt the sentiment for Alphabet shares toward AI-winner, at least near term,” they wrote.
Even as the remedies resolution was generally welcomed by investors, the company will have to make some concessions, according to the judge’s ruling. Most notably, Google has to make available certain search data and user data to its “qualified competitors.”
Determining which companies fall into that category will be the job of a technical oversight committee at a date that hasn’t yet been announced.
Services like DuckDuckGo and Microsoft Bing may be among the beneficiaries, potentially receiving improved access to some of Google’s search index data under specific licensing arrangements.
Mehta wrote that the data-sharing remedies “can help to close the sizeable advantage Google has in answering long-tail queries, thereby improving product quality and attractiveness to new users.”
Baird analysts wrote that they expect a “modest” impact to Google, because the company doesn’t have to share its data with generative AI competitors like Perplexity and OpenAI. That would have been “more problematic,” the Baird analysts wrote.
Google, which plans to appeal the ruling, declined to comment, but pointed to an earlier blog post on the judge’s decision.
“We have concerns about how these requirements will impact our users and their privacy, and we’re reviewing the decision closely,” the company wrote.
Abiel Garcia, a former deputy attorney general for the California Department of Justice, working in antitrust, said he doesn’t see the ruling having an impact on the way Google operates.
“Maybe some of the data will help competitors’ products at the periphery, but I don’t think this is going to really shift anything,” Garcia, who’s now a partner at Kesselman, Brantly & Stockinge, told CNBC. “It almost encourages Google’s roll-the-dice behavior.”
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., wears a pair of Meta Oakley Vanguard AI glasses during the Meta Connect event in Menlo Park, California, US, on Wednesday, Sept. 17, 2025.
David Paul Morris | Bloomberg | Getty Images
Meta’s AI app has seen a major jolt in downloads since launching its Vibes feed of AI-generated videos, giving investors a glimpse of the company’s artificial intelligence strategy ahead of Wednesday’s third-quarter earnings.
Since releasing Vibes on Sept. 25, the Meta AI app’s downloads on both iOS and Android are up 56% month-to-month to a total of 3.9 million downloads as of Oct. 18, according to data provided to CNBC by mobile research firm Appfigures.
“That’s what I’d call standout growth,” said Appfigures Head of Insights Randy Nelson, adding that “the month’s not even over.”
Still, OpenAI’s rival Sora app, which launched Sept. 30, appears to have more momentum despite only being available on Apple’s iOS platform and requiring an invitation for use. From Sept. 30 through Oct. 18, Sora saw 2.6 million downloads on iOS, compared to the 1.1 million downloads of the Meta AI app, according to Appfigures.
Sora’s early popularity isn’t surprising to nearly a dozen creators, marketers and brand agencies that spoke with CNBC about about their interest and use of the AI tools.
Meta declined to comment.
Creators and marketers say they generally find Sora easier to use. Among the key distinctions is Sora’s capability of producing more realistic looking videos that show people talking, while Vibes only lets users choose select songs as accompanying audio.
The Vibes feed is filled with surreal, playful content, ranging from four lions sharing a pizza in the jungle to a hedgehog singing karaoke.
Meta has been paying creators to produce AI-generated videos for Vibes as a way to boost the visibility of the app, according to people with knowledge of the matter. Meta has sought out influencers who specialize in generative AI tools provided by the startup Midjourney, and is requiring them to sign non-disclosure agreements, according to the people, who asked not to be named because they weren’t authorized to comment on the matter.
Meta’s evolving AI strategy
The Facebook parent debuted the Meta AI app in late April, confirming an earlier CNBC report. The app was originally called Meta View and was used by owners of the Ray-Ban Meta AI glasses to manage their device settings, import photos and perform other utility functions.
The app, which is still used to manage Ray-Ban Meta glasses, was relaunched as Meta AI to serve as the company’s hub for users to interact with the social media firm’s ChatGPT-like AI assistant, but the September launch of Vibes added a video feed component similar to that of TikTok. The key difference is that all of the content found on the Vibes feed has been created entirely by AI generators.
Unlike Sora, which is powered by OpenAI’s proprietary model, Meta AI’s Vibes feature relies on models provided by third parties like Midjourney and Black Forest Labs, according to a Threads post last month from Alexandr Wang, Meta’s chief AI officer and the former CEO of Scale AI. Meta is also developing its own internal generative AI technology, Wang wrote.
Meta’s reliance on third-party AI models to power Vibes underscores the company’s newfound willingness to seek outside help as it tries to get its AI technology back on track. The underwhelming launch of Llama 4 in April spurred CEO Mark Zuckerberg into spending billions of dollars to shake up Meta’s AI organization and install new leaders like Wang, CNBC previously reported.
That overhaul continued last week, when Meta laid off 600 employees in its AI organization. The company spared Wang’s core TBD Labs group, which now overseas touchstone AI efforts like Llama.
Meta’s AI strategy is sure to be a major topic in the company’s third-quarter earnings report and investor call on Wednesday. For the quarter, analysts expect revenue growth of 22% from a year earlier to $49.4 billion, according to LSEG. Wall Street expects revenue growth for the full year of 19% to $196.2 million.
Meta Vibes
Cfoto | Future Publishing | Getty Images
Some of the influencers that Meta is paying to populate Vibes are based in India, where Sora is not yet available and TikTok is banned.
Company executives have previously said that Meta AI usage, largely accessed via the company’s WhatsApp service, is the highest India, the world’s most-populous country, even though not all influencers there get paid.
“One of the biggest reasons that got me excited is because I’ve been in the creator ecosystem for almost 15 years now,” said Gaurav Bisen, a creator from India who posts 10 to 15 times a day on Vibes but isn’t paid by Meta. “Creating content on Instagram, TikTok, YouTube takes a lot of time, energy and investment. But here, it’s so easy. You just type a prompt.”
Bisen said he’s found early traction on Vibes, where his following has grown to more than 25,000. He said he’s learned that short, animated dance clips perform best.
“People who didn’t have the confidence to come in front of a camera can now create from their imagination,” Bisen said. “You can produce creative content without even being in it.”
Still, engagement on Vibes remains limited compared to Instagram or TikTok. Most creators told CNBC that their posts average fewer than 10 likes and almost no comments.
Instead, Vibes users measure success through “remixes” – a feature that lets creators take an AI-generated video, edit the prompt and repost it as their own.
“Remixes kind of seem like the currency on the app,” said Dylan McIntyre, who runs the AI video account JunkBoxAI on Instagram, where he has more than 1.3 million followers but just 22,000 on Vibes. “People are liking what they’re seeing and want to make their own and repost it.”
Meta is leaning heavily into generative AI as it courts creators and competes with OpenAI. Its AI Studio tool lets users build customizable AI characters and chat with them across Messenger, Instagram and WhatsApp.
Investors will also be listening for commentary on the company’s Metaverse strategy.
Meta confirmed on Monday that Vishal Shah, who spent the past four years leading metaverse initiatives, is now helping run AI products as part of the company’s Superintelligence Labs division, which is led by recent high-profile hires, including former GitHub CEO Nat Friedman.
Shah, who will now report to Friedman, was previously a vice president of product at Instagram. The Financial Times first reported on Shah’s new position.
WATCH: Partnership with Meta for smart glasses helps lift EssilorLuxottica sales.
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