👉 Background: Reddit is the social media platform where people share wacky stories, ask for advice, and even often coordinate different campaigns. It has grown to more than 76 million daily visitors and over 100,000 online communities.

👉 What happened: In 2021, Reddit planned to IPO at a valuation of $10 billion USD, but it fell through. Now, Reddit is back for Round 2. It will IPO on the New York Stock Exchange later this month at a more modest valuation of $5 billion USD.

👉 What else: This time around, Reddit is doing something a bit different from the norm: they're offering Reddit shares to 75,000 of its core users at the pre-IPO price - before the shares hit the stock market.

What's the key learning?

💡The pre-IPO stage is often likened to an exclusive club where entry is reserved for the market's elite.

💡Traditionally, access to pre-IPO shares is limited to institutional investors and high-net-worth individuals. The 'logic' is that they are better equipped to absorb the risks associated with newly public companies.

💡But getting access to pre-IPO deals has enormous upside for those elite:

• In 2022, the average first-day gains after an IPO in the US was 8%.
• In 2021, it was 16% first-day gains.
• In 2020, it was 23% first-day gains.

So, by just buying the shares and doing nothing else, these professional investors are likely to make a profit.