How to Buy Reddit Stock (RDDT) After Its IPO?

With Reddit officially going public in 2024, many investors are eager to get their hands on Reddit stock (ticker symbol RDDT). Reddit is one of the most influential online platforms, known for its community-driven forums and viral discussions (think GameStop’s meteoric rise). If you’re looking to buy Reddit stock, this guide will walk you through the process, explain the company’s financial fundamentals, and help you decide if investing in Reddit is right for your portfolio.

How to Buy Reddit Stock (RDDT)

You can buy Reddit stock just like any other public stock — through a brokerage account. Follow these simple steps to invest in Reddit:

1. Open an Investment Account

To buy Reddit stock, you’ll first need an investment account, also known as a brokerage account. These accounts allow you to buy and hold investments like stocks, bonds, and ETFs. If you don’t already have one, you can open an account with any major broker such as E*TRADE, Robinhood, or Fidelity.

There are different types of investment accounts to choose from, such as traditional brokerage accounts or tax-advantaged accounts like Roth IRAs. Choose one that fits your financial goals.

If you’re new to investing, you can practice paper trading, which lets you invest with fake money and get the hang of trading without risk.

2. Fund Your Account

Once your account is set up, add money to it. Most brokers accept transfers from your bank account, credit cards, or even other investment accounts. You’ll need to fund your account before you can buy Reddit stock.

3. Search for Reddit Stock (Ticker: RDDT)

In your brokerage platform, search for Reddit stock by entering its ticker symbol, RDDT. This will pull up Reddit’s stock information, including its current price and past performance.

4. Place Your Order

Now that you’ve located Reddit stock, it’s time to place your order. You’ll typically have two choices:

Market Order: Buy Reddit stock at the current market price.
Limit Order: Set a price you’re willing to pay, and the order will only execute when the stock hits that price.

Once you’ve selected your order type, enter the number of shares you want to buy, or the amount you want to invest in dollars. After filling out the details, click Submit to finalize your purchase.

5. Monitor Your Investment

Once your order is filled, Reddit stock will be part of your portfolio. From here, monitor its performance and decide whether to hold it for the long term or adjust based on your investment strategy.

Research Reddit’s Fundamentals

Before buying Reddit stock, it’s essential to research the company’s financials. Since Reddit only recently went public, this information will now be available through regular SEC filings. Key things to look for include:

Revenue growth
Net income
Earnings per share (EPS)
Advertising revenue (Reddit’s primary income source)
Reddit Premium subscribers

By understanding these metrics, you can make an informed decision on whether Reddit stock fits into your portfolio.

Decide How Much to Invest in Reddit

When Reddit stock went public, it opened at $47 per share. Since then, its price has fluctuated between $45 and $50. If you’re considering buying Reddit stock, it’s important to determine how much to invest.

A good rule of thumb for investing in individual stocks is to limit them to 5-10% of your overall portfolio. For example, if you have $10,000 to invest, you may allocate between $500 and $1,000 to Reddit stock, ensuring that the rest of your portfolio is diversified across various sectors and asset classes.

It’s also important to be aware of the potential volatility around IPOs. Often, there is a lockup period after an IPO, typically 90 to 180 days, during which employees cannot sell their shares. Once this period ends, there may be a spike in the stock price as employees sell their holdings.

Placing Your Reddit Stock Order: Market vs. Limit Orders

When buying Reddit stock, you can choose between two types of orders:

Market Order: This type of order buys the stock at the best available price at the moment of the transaction. However, the actual price may differ slightly from what you see when you place the order.
Limit Order: This allows you to set a specific price at which you want to buy the stock. If the stock reaches your target price, the order will be executed. If it doesn’t, your order will remain pending until the stock hits your limit.

Consider your investment timeline and strategy before placing your order. If you’re in it for the long haul, fluctuations in price might not matter as much in the short term.

Reddit IPO History and Stock Performance

Reddit filed its confidential IPO paperwork in 2021 but officially went public in 2024, seeking a valuation of $6.5 billion. The company priced its shares at $34 per share, with the stock opening at $47 and jumping to over $65 within its first week of trading.

While Reddit is now competing against platforms like Meta (formerly Facebook), Pinterest, and TikTok, it offers a unique space for deep discussions and niche communities, which continues to attract millions of daily users. Reddit’s user base has grown steadily, with over 76 million daily active users reported in December 2023.

Is Reddit Stock a Good Investment?

Reddit’s stock is a high-risk, high-reward investment. While it has strong user engagement, its revenue streams—primarily advertising and Reddit Premium subscriptions—are still evolving. Moreover, Reddit is up against stiff competition from major players like Meta and TikTok, making profitability a key concern for investors.

Given these factors, Reddit stock could be an attractive option for investors with a high risk tolerance who believe in the company’s long-term growth potential. However, it may not be suitable for conservative investors seeking stable returns.

Final Thoughts on Buying Reddit Stock

Buying Reddit stock is a straightforward process, but like any investment, it’s important to do your research. Be sure to evaluate Reddit’s financials, consider your investment goals, and understand the risks involved. Whether you’re looking to buy Reddit for its growth potential or diversify your portfolio, careful planning is key.

Reddit’s stock price recently popped due to the resurgence of meme stocks, reflecting the platform’s influence in these viral movements.
Reddit IPO’d on March 21 and started trading at $47 per share.
Since its IPO, Reddit has generally been trading between $45 and $50 per share, making it a stable yet potentially volatile stock depending on market trends.

By staying informed about market movements and Reddit’s growth trajectory, you can make more strategic decisions when adding RDDT to your portfolio.