Investing in Reddit stocks is a good choice to increase the value of your portfolio and reach a growing market. Before you ask yourself How to Buy Reddit Stocks? , you need to ask yourself:
Why should you invest in stocks on Reddit?
How can you invest in penny stocks?
What are your goals and understanding of stocks?
How can you capitalise on the success of Reddit stocks?
Reddit is a fast-growing social media platform that has 48 million active users only in the US. This number is expected to reach 53 million by 2025. Reddit penny stocks provide an opportunity to grow better in marketing through investment.
Can you invest in Reddit stock?
Reddit is a privately held company, so you can’t buy Reddit stock. You can’t buy stock through an online brokerage because it’s not on the public stock exchange.
However, Reddit’s initial public offering (IPO) could be coming out in the second half of 2023. The paperwork for the IPO has already been submitted to the Securities Commission in 2021.
How to Buy Reddit Stocks?
Some brokers let investors invest in IPOs. Shares are often limited and carry no allocation guarantee. So, if you want to invest in Reddit’s IPOs before they hit the market, you need to have your account ready on these platforms:
Fidelity: Accounts should be in private or premium client groups or meet household income requirements.
Charles Schwab: You can create an account with a minimum balance of $100,000 and a history of 36 trades.
TD Ameritrade: You should be a part of the trading group and have $250,000 in balance or 30 trades experience in the last three months.
E*Trade: The only criterion is to fill out the eligibility questionnaire.
Participation in IPOs may come with the option to sell acquired shares during a lockup period ranging from 60 to 90 days. However, there’s no guarantee that you’ll make profits. So consider restrictions before making investments.
Buy Reddit before the IPO date.
Accredited investors can get the chance to buy pre-IPOs if secondary marketplaces offer them. It comes from employees who are compensated by receiving stock. Seller-buyer negotiations set prices.
You can access secondary marketplaces in the following ways:
Sign up for the chosen platform.
- Go through the accreditation process.
- You can check offers once verified.
- Add funds to your account and buy shares.
Offers are open to accredited investors but don’t forget that different marketplaces could have different requirements.
How do I make an indirect investment in Reddit stock?
You can get exposure to Reddit stock through investors like Tencent Holdings and Pinterest.
Tencent Holdings Limited (TCEHY): It is one of the tech giants in China. WeChat – China is run by Tencent. Mobile games like Honor of Kings are also theirs. They were added to the Hong Kong Stock Exchange in 2004. Through ETFs, investors in the US can buy stocks in the KraneShares CSI China Internet ETF (KWEB).
Pinterest: Another potential source is Pinterest. Users of both Reddit and Pinterest are quite similar. Millions of users worldwide visit these platforms for new ideas and content. It was founded in 2010 and went public on April 18, 2019. The company’s market capitalisation reached $15.74 billion in 2023.
In 10 financing rounds, Reddit raised $1.3 billion. In August 2021, it raised $410 million and was valued at $9.6 billion. This shows the potential and fame of Reddit. This number is expected to increase in the upcoming years. Thirty-one investors, including Fidelity, Sequoia Capital, Tencent, and Andreessen Horowitz, supported Reddit, and these investors are well-received among the investor community.
Private equity firms and venture capitalists fund Reddit. They raised $300 million in 2019, valued at $3 billion.
Reddit’s service is expanding. They are looking to hit the advertising and e-commerce sectors. For most investors, Reddit is perfect for long-term investments.
The safest way to invest in Reddit is after an IPO. This way, you can buy shares with the usual brokers and sell them without any time restrictions. Before the IPO, you might avoid spilling bucks on high prices while participating in the IPO.
After the IPO, you may even buy those shares at a low price. You can also consider market reception because some IPOs may soar or crash. If stocks gain value immediately, you can make big bucks after the IPO, but that doesn’t always happen.
As pre-IPO has a 60–90-day lockup period, you should play it safe by buying after the IPO to avoid this and play the long game. This will give you flexibility and make you incredible profits if stocks grow. The key is similar to almost every business model in that you’ll have to think long-term to get high rewards.
Any concerns about investment in Reddit?
Risks are always around the corner in almost every investment, and the early stages of a company are even more important to avoid substantial losses.
Below are a few things to consider before investing in Reddit:
It’s not profitable: The company has been concerned about users’ reactions to ads, which forced them to pursue advertising very late on a larger scale. Advertisements wouldn’t have a big impact since the independent image of Reddit lures users.
Liability Issues: Reddit is open to more controversial content than other social media platforms and is loosely moderated. This makes it more vulnerable to lawsuits or regulators.
Shaky Market Condition: The market needs to be more active. Despite the weak market, Reddit may need to get the desired reception for the IPO. They can’t postpone the IPO either because investors may be unable to move shares.
Limited Worldwide Growth: Reddit is banned in many countries, including the big user markets of China, India, and Indonesia.
These risks are speculative and may or may not emerge. There may be more risks that are yet to be anticipated.
Reddit is not publicly traded, but they have filed for an IPO. An announcement is expected to be made by the second half of 2023. But you can invest in IPOs even before the announcement.
You can make indirect investments through Tencent and Pinterest or check secondary marketplaces to see if stocks are available.
Remember, risks are still there because access to company financial statements is limited, and private companies need special consideration before making investments. Remember to research the companies, stock prices, and other related things. You should also seek the advice of experts in the field.
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