(NewsNation) — Reddit, the online discussion board with niche groups and interest-based communities, is expected to go forward with its first public offering Thursday.
Reddit plans to list 22 million shares at price points between $31 and $34, according to Associated Press reports citing Security and Exchange Commission (SEC) filings. The company could earn between $473.6 million and $519.4 million from the sale of roughly 15.3 million shares.
Reddit’s SEC filings stated that the company has promised to keep the platform a “real and authentic place to build and find community.”
According to the AP, Reddit’s existing investors will sell another 6.7 million shares in the offering, raising between $208.4 million and $228.6 million for their portfolios.
Will this change how the site is moderated?
Transitioning from a community-moderated platform to one that is beholden to stakeholders means that Reddit will face decisions about how much to moderate its content while maintaining the model that originally attracted users.
On the one hand, polarizing content could drive away advertisers who are afraid of associating with potentially objectionable posts.
In 2015, advertisements for brands like Aveeno, Secret deodorant and Bud Light ran on YouTube ahead of ISIS and jihadi videos, noted Christopher Terry, an associate professor at the University of Minnesota’s Hubbard School of Journalism and Mass Communication.
“Certainly, when Elon Musk took over Twitter, this was an ongoing problem and continues even to this day, that advertisers’ content is being put adjacent to content that they really don’t want to be associated with,” Terry said.
On the other hand, Reddit users are used to generating and moderating their own content and may be put off by harsher restrictions.
“They may find a happy balance there, and it works fine,” Terry said. “Reddit has a lot of pretty dedicated fans. But is there a point at which you just decide, ‘I don’t want any part of this anymore?’”
Will Reddit have more sponsored content?
In terms of profitability, Reddit isn’t immune to the responsibilities that come with going public.
With stakeholders to think of, the company will need to turn a profit, likely through advertising revenue, Terry said.
“As a result of that, I would suspect that it’s going to need to police itself, maybe not remove content, but segregate it in ways that it kind of does anyway, but it’s probably going to have to be more deliberate about that,” he said.
Already, some users are reporting frustration with sponsored and promoted posts that they say are more prevalent, troubleshooting with one another to find an effective way to report or block them.
“A lot of people got used to user-interactive spaces that didn’t have as much advertising as traditional radio and television and even cable stations did,” Terry said. “Those gaps are not as prominent as they used to be, and advertising has infected platforms the way it had infected traditional media in the past.”
What are the positives?
It’s too soon to say whether Reddit’s model will be successful.
Pushing out relevant ads for users before they’ve considered a product or service on their own can work, but it’s hard to achieve, Terry said.
The immediate excitement is likely to come from those enticed by the idea of Reddit’s shares going public, he said.
“I think there will be some people who are pretty excited about it, and I hope it goes well for them,” Terry said. “But getting past the initial IPO and however the company has capitalized after that is only step one in a multistep process that they’re going to struggle with over the next couple of years.”
Some users and moderators who have contributed to Reddit may be invited to buy shares in the company’s IPO through a directed share program.
Reddit also reserved 1.3 million shares of its Class A common stock to fund community-related programs so users can “bring their ideas to life.”
