If you are a certain kind of cynical, Reddit\u2019s S-1 filing<\/a> sets off alarm bells. There\u2019s the mention of r\/WallStreetBets. (Five mentions in total, actually.) There\u2019s the stockpile it\u2019s amassed of Bitcoin and Ethereum. And there\u2019s the program to give certain power users the option of buying stock before it debuts on the public market.<\/p>\n<\/div>\n The S-1 is a document filed with the US Securities and Exchange Commission before a company goes public. It discloses all sorts of things: revenue figures, risk factors, key data about the business. And it sends certain signals. In this case: I see some meme stock shit.<\/p>\n<\/div>\n I can totally imagine corporate insiders figuring, well, Reddit is the place for meme stocks, so yolo, etc. Except here\u2019s the thing: Redditors aren\u2019t enthused about it.<\/p>\n<\/div>\n \u201cThe beginning of the end.\u201d<\/p>\n<\/div>\n<\/div>\n \u201cShort the shit out of it,\u201d wrote one r\/Wall StreetBets user<\/a>. \u201cThey have not proven that this user base or data set can be monetized.\u201d\u00a0<\/p>\n<\/div>\n And there was this person<\/a>: \u201cLoads puts into the put-cannon with malicious intent<\/em>.\u201d (For those not up on the parlance, they\u2019re intending to bet the stock goes down. Given the use of \u201cput-cannon,\u201d I assume they\u2019re betting heavily. I am trying to imagine a situation where one loads the put-cannon without malicious intent, but it hasn\u2019t sprung to mind.)<\/p>\n<\/div>\n Okay, but that\u2019s just r\/WallStreetBets! Surely there are other Reddit users who are more enthusiastic, right? On r\/technology, the top comment on the IPO story<\/a> is, \u201cThe beginning of the end.\u201d There\u2019s gloomy speculation about the measures management may take to make the company profitable \u2014\u00a0which subreddits might be banned, how much users might have to pay to post, a heavier ad load. And one user called the directed share program<\/a>,\u00a0which lets top users buy in early,\u00a0\u201ca scam. It\u2019s just Reddit running the scam.\u201d They are also mad that Aaron Swartz has been erased as a co-founder<\/a>.<\/p>\n<\/div>\n This isn\u2019t just bellyaching. There are serious questions about Reddit as a business. Reddit isn\u2019t profitable. Reddit has never been profitable. Reddit\u2019s risk factors section of its IPO is, as Bloomberg<\/em> Opinion\u2019s Dave Lee points out<\/a>, longer than Twitter\u2019s and Facebook\u2019s IPO risk factors combined.\u00a0<\/p>\n<\/div>\n \u201cI think it\u2019s pretty cool that Reddit is doing this IPO offer to their mods and users.\u201d<\/p>\n<\/div>\n<\/div>\n That\u2019s because Reddit is much more vulnerable to its users than other social media sites, as various Reddit rebellions have made clear. Its model of community moderation has upsides \u2014 it means that the 60,000 mods are more familiar with their community than contractors would be. But Reddit doesn\u2019t pay them and thus will have a harder time controlling them.<\/p>\n<\/div>\n If you squint, you can kind of see how Reddit is trying to ameliorate that risk by offering shares to power users. Because they\u2019re shareholders, they\u2019ll want to keep their own shares valuable. That means they\u2019d be less likely to do things that would cut off advertising revenue, like abruptly shutting down a subreddit in protest.\u00a0<\/p>\n<\/div>\n \u201cI think it\u2019s pretty cool that Reddit is doing this IPO offer to their mods and users,\u201d a Reddit user who asked me to identify him as Kevon tells me. \u201cIt\u2019s a nice little thank you that actually may have some monetary value.\u201d\u00a0<\/p>\n<\/div>\n Reddit\u2019s directed shares program works like this: Qualified users \u2014 people with enough karma or who have spent enough time working as mods<\/a>, basically \u2014 received an email from the company that asks them to provide certain personal information to pre-register for the program. After about three weeks, everyone who signed up will get an email telling them whether they qualified. (Depending on how many people sign up, there may be a waitlist.) The people who did qualify will get \u201cfurther instructions,\u201d though Reddit\u2019s FAQ<\/a> is not clear about what those instructions will entail. <\/p>\n<\/div>\n The share program \u201cseems like a gimmick to me honestly.\u201d<\/p>\n<\/div>\n<\/div>\n Kevon\u2019s considering buying shares in the Reddit program, and may buy more once it goes public, if he feels the stock is undervalued.<\/p>\n<\/div>\n You can look at it, as Kevon does, as a nice thank you to people who\u2019ve meaningfully contributed. But let\u2019s say you\u2019ve sunk hours of your life into being a Reddit mod, and you\u2019ve bought shares. There\u2019s a possibility you\u2019ll lose money \u2014\u00a0and effectively pay<\/em> for the privilege of content moderation. Fun!<\/p>\n<\/div>\n The share program \u201cseems like a gimmick to me honestly,\u201d says Dan M., who also received the offer. After all, it\u2019s not like the shares are being given away for free, he says.<\/p>\n<\/div>\n All of the Redditors I spoke to for this story enthused about Reddit as a community. In an internet era of SEO garbage and social media engagement bait, it\u2019s one of the bright spots. It\u2019s a place where there are still enthusiasts and experts, where people can still learn things, says Dan. \u201cWhile the rest of the internet is all a giant mess, Reddit still feels like a place where you can learn things and have fun,\u201d says u\/itsreallyreallytrue, who also received an invitation and is considering buying into the share program.<\/p>\n<\/div>\n But a good community isn\u2019t quite the same thing as a viable business. Despite having been founded in 2005, the S-1 notes that Reddit is \u201cin the early stages of monetizing our business and there is no assurance we will be able to scale our business for future growth.\u201d Most of Reddit\u2019s revenue comes from advertising, but it hasn\u2019t been very good at making money. That might be because of its laissez-faire approach to moderation; hate speech wasn\u2019t banned from the site until 2020.<\/p>\n<\/div>\n \u201cExecutives look at a highly engaged community and think \u2018there\u2019s gotta be a way to squeeze money out of this.\u2019 But maybe there just isn\u2019t.\u201d<\/p>\n<\/div>\n<\/div>\n Plus, user engagement isn\u2019t regular. Events such as the war in Ukraine and the release of the video game Elden Ring<\/em> \u2014 these are Reddit\u2019s own examples \u2014 lead to spikes in user engagement. And a lot of users are passive, not even logged in. So targeting is a little trickier than it might be on, say, Instagram.<\/p>\n<\/div>\n \u201cIt\u2019s Tumblr all over again,\u201d says Dan, who isn\u2019t buying shares. \u201cExecutives look at a highly engaged community and think \u2018there\u2019s gotta be a way to squeeze money out of this.\u2019 But maybe there just isn\u2019t.\u201d<\/p>\n<\/div>\n Sure, Reddit\u2019s trying to diversify its revenue by selling its data to help train AI<\/a>; I don\u2019t think the timing of that Google deal<\/a>, just days before the S-1 became public, was a coincidence.\u00a0<\/p>\n<\/div>\n Reddit has also tried monetizing through blockchain initiatives. It sold NFTs as another revenue source<\/a>. (During the peak of NFT hype, some of these assets sold for millions \u2014\u00a0and now the majority of NFTs are \u201cworthless<\/a>.\u201d) It also had to end the Community Points product<\/a>, which was a disaster for many<\/a> whose tokens suddenly had no value.<\/p>\n<\/div>\n The Community Points were a gimmick; are the shares a gimmick, too?\u00a0<\/p>\n<\/div>\n<\/div>\n The forays into web3 \u2014\u00a0beyond the Bitcoin and Ethereum holdings, the value of which Reddit did not disclose in its S-1 \u2014 make me a little suspicious about the shares being offered to users. The Community Points were a gimmick; are the shares a gimmick, too?\u00a0<\/p>\n<\/div>\n We can lay the blame for these gimmicks on CEO Steve \u201cu\/spez\u201d Huffman<\/a>. They aren\u2019t the only bizarre decisions he\u2019s made. He\u2019s said that the API price increase last year that led to user protests, for instance, was partly because \u201cElon Musk did it<\/a>.\u201d (How\u2019s Twitter \u2014 sorry, I mean X \u2014 doing with advertisers, spez?) His PR tour during the Reddit rebellion was frankly disastrous<\/a>.<\/p>\n<\/div>\n And while Huffman now<\/em> thinks that Reddit as a corpus of training data for AI is valuable, he let his board member Sam Altman siphon off Reddit data<\/a> for free; Altman was, and still is, the CEO of OpenAI. Altman\u2019s also Reddit\u2019s third-largest shareholder and owns more than twice as many shares as Huffman. Altman was the CEO of Reddit for eight days.<\/p>\n<\/div>\n In the S-1, Huffman is<\/em> listed as a risk factor, but perhaps not properly. \u201cHuffman is critical to the management of our company and instrumental in the development of our technology and our strategic direction\u201d and thus hard to replace, the S-1 says. The actual<\/em> risk factor is the number of people who think \u201cfuck spez\u201d is a great catchphrase<\/a>, because his job depends more than any other social media CEO\u2019s job on keeping the users happy.<\/p>\n<\/div>\n \u201cFuck Spez, Fuck Elon, Fuck Sam Altman.\u201d<\/p>\n<\/div>\n<\/div>\n Well, many of those users don\u2019t seem very happy about the IPO and are expecting Huffman to run the site into the ground. \u201cI don\u2019t really see any good that can come from Reddit going public,\u201d Dan M. told me. \u201cNot to sound dramatic but it kinda feels like the final nail in Reddit\u2019s coffin after years of degrading quality.\u201d<\/p>\n<\/div>\n Kevon, who told me he was thinking of investing, says he thinks Huffman was overpaid. (In the filing, Huffman is listed as making $193 million in 2023.) He was surprised Huffman made so much while the company was operating at a loss.\u00a0<\/p>\n<\/div>\n