How to buy Reddit stock
Reddit has become the go-to place for people from all over the world to connect and have discussions about whatever topic that interests them. It ranks 19th among the world’s most-visited websites, according to a chart compiled at the start of January 2022 by Similar Web. It has even become a popular destination to exchange stock buying tips. TIn fact, its WallStreetBets forum has 11.6 million members and is credited with influencing the stock prices of companies such as GameStop and AMC. Now, Reddit is getting ready to come out with its own IPO. Are you a buyer of Reddit when it IPOs? Let's take a look at whether investing in Reddit's IPO is likely to offer a lucrative buying opportunity for investors.
How can I buy Reddit pre-IPO?
Since its founding in 2005, Reddit has raised a total of $1.3 billion, with over 70% of that raised in the last two-and-a-half years. Individual investors can purchase shares of Reddit through pre-IPO marketplaces. In most cases, you will have to be an accredited investor with a high net worth. In the US, you may need to meet the SEC’s accredited investor criteria to qualify. Those interested in pre-IPO access (or shares at their initial offering price) for Reddit can use a broker that specializes in pre-IPO sales like Forge Global and EquityZen. If you have the resources and a suitable risk profile, Reddit pre-IPO is an investment opportunity you should not miss out on.
How can I buy shares in Reddit when it goes public?
Online discussion platform Reddit confidentially filed for its initial public offering (IPO) in December 2021. Once Reddit goes public, you'll need a brokerage account to invest. To participate in Reddit IPO you need to use an IPO investing app like TD Ameritrade, Charles Schwab, SoFi Active Invest, E*Trade, or Fidelity. They give its customers access to IPOs and secondary offerings through their existing brokerage accounts.
Should you buy Reddit stock?
Reddit grew in popularity as a destination for enthusiasts of practically everything. More than 50 million people were counted as daily active users of Reddit as of January 2021. Top of the list is Facebook with 180.7 million users, followed by Instagram with 126.3 million, and TikTok with 90.6 million. Reddit comes in at number eight with a relatively modest 45.9 million users.
Reddit was valued at $9.6 billion in August 2021, more than triple its 2019 valuation of $2.7 billion. If Reddit achieves a $15 billion valuation in its IPO and the $100 billion quarter revenue figure is accurate, the Company’s price/sales ratio would be 37.5, well above Meta (Facebook) at 5.2, Snap at 13.6, and Twitter at 6.0. Reddit would be showing a much higher year-over-year revenue growth rate, at 192%.
Considering Reddit's most current revenue and valuation numbers, the stock will possibly have a fairly high valuation, compared with its peers. If they fail to continue their growth rate, that valuation may not be achievable or sustainable.
It's still too early to say whether or not investing in Reddit's IPO is a good choice. Though compelling, interested buyers must still analyze the S-1 when it’s publicly available. Once the company releases the financials, it will be interesting to see what are the opportunities and risks for the company in the long term.
It’s always worth discussing your plans with a qualified investment advisor!
