Reddit IPO: How to Buy Reddit Stock

If you’ve ever tried to crowdsource an answer to an obscure question or find cool stuff to do in a random city, you’re probably familiar with Reddit. The forum may feel reminiscent of a ‘90’s chatroom, but the site has a strong internet presence and an influential base of users (GameStop, ever heard of it?).

Reddit IPO history

In 2021, Reddit announced it had confidentially filed its IPO paperwork with the U.S. Securities and Exchange Commission (SEC), but it held off on actually going public until 2024^[0]

How to buy Reddit stock

Now that Reddit is public, you can buy Reddit stock through an investment account. You'll need to add money to the account and then search within the brokerage's platform using the symbol "RDDT." While some Reddit users were eligible to purchase stock through Reddit's Directed Share Program at the IPO, most investors interested in Reddit stock will not be able to purchase it from Reddit the company^[0]

Here's the simple way to buy Reddit stock:

1. Open an investment account.

2. Add money to the account.

3. Search for Reddit stock within your brokerage account's platform using the ticker "RDDT."

4. Fill out the order, indicating whether you want to buy the stock in dollars or shares.

5. Submit the order.

» Check out the best brokerage accounts for stock trading

If you need more information, here is a full overview of how to buy Reddit stock.

1. Open an investment account

Investment accounts, also called brokerage accounts, are not actual investments themselves. Investment accounts are where your investments, and the money you use to buy investments, live. There are a handful of types of investment accounts, such as Roth IRAs or standard brokerage accounts. Some of these accounts come with tax benefits, so it's worth figuring out what type of account is best for you.

If you're not quite ready to put your hard-earned money on the line, you can always try paper trading first. Paper trading allows you to practice investing with fake money.

» Want some practice first? Try a broker that offers paper trading

2. Research Reddit's fundamentals

When purchasing any stock you’ll want to consider the company's fundamentals, such as its revenue, net income and earnings per share. When looking into a company that is new to the public sphere, such as Reddit, it can be difficult to find that information since private companies don’t have to produce regular reports. Now that Reddit has gone public, that information will be more readily available because the company will be required to provide regular financial updates to the SEC.

» Learn how to research stocks

3. Decide how much to invest

Reddit opened at $47 a share and since then its price has hovered between $45 and $50. That being said, it's not uncommon for a stock's price to drop after it goes public. This is often caused by what's called a "lockup" period. Companies sometimes offer their employees company stock, but when a company IPOs, it may restrict its employees from selling that stock for a period of time. Lockup periods usually last between 90 and 180 days. Once that lockup period ends, employees sell their stock, and the extra supply of stock in the market can cause the price to go down.

Like any significant purchase, it’s a good idea to know how much you feel comfortable spending before you hit “buy.”

If you're trying to decide how much of a single stock to buy, you may also want to consider how that stock will affect the rest of your portfolio. If you already have a well-diversified investment portfolio (one that covers many industries, geographies and company sizes) purchasing lots of shares of a single company’s stock can throw off that balance.

A good rule of thumb is to not invest more than 5% to 10% of your overall investment portfolio (that includes all your investment accounts, such as a 401(k), an IRA and any traditional brokerage accounts) in individual stocks. For easy math, that means if you have $100 to invest, you may only want between $5 and $10 to be allocated to individual stocks such as Reddit.

The rest of your account could be made up of funds, such as index funds. Funds offer instant diversification for your portfolio since they invest in lots of companies at once. That way, if one company performs poorly, your overall portfolio is bolstered by the performance of the other companies.

4. Place your order

Now comes the fun part — actually buying the stock. Like any stock, Reddit's price fluctuates throughout the day. If you’re planning on holding onto your stock for many years to come, there's no real need to worry about if you’re getting the best possible price at the moment of purchase.

When you’re ready to buy the stock, search for “RDDT” within your investment account's platform, and open an order page. You’ll probably have to choose between the two most common types of orders: Market orders and limit orders. Market orders happen at the best market price available, so there may be a slight difference between the price you see and the price you pay. Limit orders let you choose a price limit, so you can specify that you want to buy but only if the stock price drops to the amount you picked. The risk with limit orders is that the stock price may never reach the price you outlined and you may not get the stock at all.

When you set your order type and how much stock you want to purchase, you’ll need to submit the order — typically through a button that says "submit," "place trade," "buy," or something similar.

The process for buying Reddit stock is similar to buying any other stock. If you want more help with the stock-buying process, check out our full guide on how to buy stocks.

Should you buy Reddit stock?

While Reddit serves a slightly different function in a different format than its competitors (think more question-and-answer and in-depth discussion than Instagram pics and platitudes), the company is still entering a ring that already has a few heavyweight champs in it.

With competition such as Meta, TikTok and Pinterest, it may be difficult for Reddit to hold its own. Plus, according to reporting from Bloomberg, the company has yet to turn a full-year profit^[0]

But there's nothing out there that's quite like Reddit. According to a letter from Reddit co-founder Steve Huffman in the IPO prospectus, more than 76 million people, on average, visited Reddit every day in December 2023^[0]

Huffman also cited the role Reddit can play in peoples' lives.

"Whatever people are into or going through, it is on Reddit. I am particularly proud of the role Reddit plays in providing support to people during pivotal life moments when turning to friends and family may not be an option. Somebody might visit r/Parenting for help when they’re having trouble with a child, or go to r/lgbt for advice about coming out, or they might turn to r/stopdrinking for help quitting drinking, as I did more than four years ago," said Huffman.