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Reddit IPO: Why does Reddit want to become a public company?

STEVE INSKEEP, HOST:

The company that calls itself the front page of the internet is becoming a publicly traded stock.

MICHEL MARTIN, HOST:

Reddit premieres on the New York Stock Exchange today - its ticker symbol, RDDT. Some of its most active users are not so thrilled and say they might try to disrupt the stock offering.

INSKEEP: NPR tech correspondent Bobby Allyn is here to explain. Bobby, good morning.

BOBBY ALLYN, BYLINE: Good morning.

INSKEEP: I guess we should ask first why Reddit would try to become a public company.

ALLYN: Well, it's about two things, Steve - raising money and becoming profitable. In the company's nearly two-decade history, it has been very bad at precisely these two things. Now, back in 2005, Reddit was founded by Steve Huffman and Alexis Ohanian. They were two college roommates at the University of Virginia. This was barely a year after Mark Zuckerberg founded a little social network known as Facebook from a Harvard dorm. This was, of course, the era of dudes starting social media sites from college dorms, right? But Reddit was a collection of free-wheeling, anything-goes message boards where people posted under pseudonyms about everything from sports to politics to internet memes. Jump ahead to today, Reddit has 73 million users.

INSKEEP: Wow.

ALLYN: But despite all of these people posting on Reddit, it's never been able to turn a profit.

INSKEEP: Why have they not been able to profit off of 73 million users?

ALLYN: They've had scandals over toxic content. They've had leadership crises. The site has not exactly been known for civil discourse. It's been chaotic, not exactly something advertisers want to place ads against. But it really has changed in recent years. It's become more tame and rule-bound than it used to be. And it, you know, makes hundreds of millions of dollars now in advertising.

But it's, you know, really tried to make even more money. Those efforts have run into protests from regular Reddit users. They prefer a scrappy version of the site that doesn't care about making money. Last year, Reddit decided to start charging third-party developers for access to its back-end data.

INSKEEP: Oh, yeah.

ALLYN: Here is how Steve Huffman, the co-founder and CEO, framed that decision in an NPR interview back in June.

(SOUNDBITE OF ARCHIVED NPR BROADCAST)

STEVE HUFFMAN: We've been subsidizing other businesses for free for a long time. We're stopping that. That is not a negotiable point. We are simply in an unsustainable position, and so we need to get into a sustainable situation.

ALLYN: And that sparked a huge backlash among Redditors. There was a mass protest that made thousands of communities, known as subreddits, go dark. Some of those users see themselves as the renegades of the internet and that they're pushing against all this Wall Street money that's about to pour into the site.

INSKEEP: How can they do anything about it?

ALLYN: Well, let's go back to 2021. There was this Reddit group that created havoc. It was called WallStreetBets. The users of this group heard that Wall Street was going to bet against this video game store that is now famous, in a way - GameStop. So they sent GameStop's price soaring more than 1,700%. It created crazy market turbulence.

Well, that very group is now talking about throwing sand in the gears yet again because they are grumbling about Reddit becoming more corporate. And Reddit could be inviting this because the company has agreed to set aside 8% of its stock to power users who volunteer to run the site as Reddit's way of giving back. But they may come to regret this because some of these folks on WallStreetBets are now talking about betting against Reddit because they're so angry about the IPO.

INSKEEP: Betting for the stock to decline, even as Steve Huffman tries to make it what he calls something that behaves like an adult company.

ALLYN: That's right. Huffman wants the company to mature. And, you know, more than 70 million Redditors just want it to stay a fun, childish playground. And this is really the core tension here, Steve - right? - between the users and its corporate shift.

INSKEEP: NPR's Bobby Allyn, thanks so much.

ALLYN: Thanks, Steve. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Steve Inskeep is a host of NPR's Morning Edition, as well as NPR's morning news podcast Up First.
Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.