Reddit is one of the most famous and well-known companies worldwide and in recent months made massive impacts on the financial industry. As such, many young and upcoming investors may be asking the question, can you buy Reddit stock?
You can’t buy Reddit stock since Reddit is a private company. Private companies are not registered with the US Securities and Exchange Commission (SEC) and they are not registered on any stock exchange.
However, there are rumours that Reddit has plans to become a publicly-traded company. However, these are inconclusive, and its Initial Public Offering (IPO) date is yet to be announced.
Can You Buy Reddit Stock?
Since Reddit is a private company, you are unable to buy their stock because they are not currently selling it on the stock market. This is a feature of public companies, and while rumors may point to Reddit going public sometime soon, those are still just rumors and not necessarily facts.
The reason why companies generally want to have an IPO after growing to a certain level is potential profit. It gives them access to cash and capital that can be used for further project development, debt reduction, or further expansion. Also, it gives them a sense of legitimacy in the eyes of many investors.
However, many other companies also associate massive risk with the IPO. If it fails or the stock does not garner enough interest, it is a time-consuming and potentially expensive process.
For many smaller companies, it is simply not worth it to pay the costs of setting up an IPO. While Reddit is a massive company that has grown exponentially in recent years, it seems as though they have been content not to take the risk associated with becoming a public company.
Finally, a large portion of Reddit’s user base have expressed disdain at the thought of Reddit becoming a public company. The worry is that if the company is soon beholden to stock investors, it will be under pressure to pay dividends every quarter.
In turn, this may increase advertising and tracking, limiting the quality of the product for consumers. This could ultimately hurt the company in the long run, since it may alienate many loyal Redditors who enjoy the platform for its limited ads and community feel.
Why can I not buy stocks from privately traded companies?
The short answer is that these companies do not have an IPO and are not registered with the US Securities and Exchange Commission (SEC) or any major stock exchange. It is much easier to invest in a publicly-traded firm because you can simply purchase as many stocks as possible at your will. So, if you find yourself asking, ‘can you buy Reddit stock’, know that you cannot because the stock options just do not exist.
Can I Invest in Private Companies?
If you had been wondering, can you buy Reddit stock? Then you may have also wondered if you can invest in Reddit through other means. It is possible to invest in private companies, but it often requires a lot more capital and as such has a much higher barrier of entry. Also, it can sometimes take a long period of time for a private investment in a company to be made, and it can be much more difficult to access and negotiate a withdrawal of your investment.
Also, since private companies do not file their financial statements with the SEC, it is difficult to track their high points and low points. As such, investing in such a firm is often risky since you cannot accurately predict its future profitability or profit trends.
However, there are some massive benefits to investing in a private company. Unlike public companies, they are not obsessed with meeting Wall street’s quarterly short-term demands. As such, they can be more focused on developing a valuable product and potentially more long-term profits. This can lead to delayed, but bigger payoffs for investors.
Why is Reddit still a major player in the stock industry?
Despite not being a public company on a stock exchange, Reddit has become famous for its role in stock market upheaval. r/wallstreetbets is one of the most well-known subreddits on the platform and single-handedly drove up the price of two major undervalued stocks, AMC and Gamestop, that many hedge fund managers had betted against. This led to massive uproar and a stir in the market that gave the subreddit major notoriety.
However, if they were to become a public company, they would be beholden to many different investors and public regulations, which would perhaps curtail the ability of these Redditors to collectively influence the stock market in the same way.