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How to buy Reddit shares
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77% of retail CFD accounts lose money.
Reddit stock isn’t available to buy yet. However, soon it will be, and this guide explains everything you need to know so that you’re prepared to dive in on day one. It’s updated regularly with all the latest news, so bookmark the page and come back to it to stay up to date with what’s happening.
When a company wants to start selling shares to the public, it holds an ‘initial public offering’ (IPO). This is normally a way to raise money in order to fund its future operations. Once the IPO takes place, you can buy or sell shares in the company whenever you like.
Below are the answers to some quick questions about the IPO, such as when it’s going to take place and whether you can buy any shares before then. After that, you can find out more about Reddit itself as a company.
When is the IPO?
The IPO is expected to take place in the second half of 2023. Often you get very little advance warning for the exact time an IPO is going to happen, so it’s worth checking back regularly so you don’t miss out.
Can I pre-order Reddit shares?
Not at the moment, no. Some companies do allow you to pre-order shares but it varies; sometimes it’s a feature that’s only available to institutional investors rather than the average person, at other times it’s only available through specific brokers.
Right now, it’s too early in the IPO process to know which camp Reddit is going to fall into. Recently, there has been more of a trend from companies like Deliveroo and Robinhood to allow their own users to place pre-orders and it’s possible Reddit might do something similar.
What should I do now?
The best thing to do for now is to create an account with an online broker and wait for more information. Even if pre-ordering isn’t available, you still need to be ready to buy shares on the first day of trading and you need to use a broker platform to do so.
In the mean time, you can also learn more about how to invest in an IPO thanks to our step-by step guide, which takes you through the entire process.
Compare the best Reddit trading platforms
These are some of the best online brokers for new users and all of them will let you buy Reddit shares when the time comes. You can create an account in a few minutes by clicking any of the links below.
77% of retail CFD accounts lose money.
How to buy Reddit stock, a step-by-step guide
Once the IPO has taken place, the process of getting shares in Reddit isn’t massively complicated, so don’t worry even if you’re new to stock investing. These are the steps to follow in order to complete your investment:
- Choose a broker. You will need to use an online brokerage platform. There are many different options to choose from, each with their own unique benefits and drawbacks. The comparison table above can help you select the right broker for you, and you can head to our comprehensive broker reviews if you’re still unsure.
- Create an account. Once you’ve selected your broker, simply go to their website and create an account. The steps required for this will vary from platform to platform, but generally you can expect to have to provide your name, email address, phone number, and some form of photo identification.
- Deposit funds. Log into your broker account and select the option to deposit funds. Depending on your broker you’ll have a variety of payment options available; most brokers accept bank transfers and debit card payments, but not all accept e-wallets such as PayPal. Select your preferred payment method and deposit the amount of money you wish to invest in Reddit shares.
- Place an order for Reddit stock. Search for Reddit’s ticker symbol and see the current price at which the stock is trading. If you’re happy with the price, enter the amount of shares you wish to own and place your order.
- Execute your order. Once you have placed your order, your broker will automatically execute it for you and your Reddit shares will be listed in your account. Congratulations, you’ve just bought shares in Reddit.
Should I invest in Reddit?
This stock might appeal most to fans of technology companies who have the stomach for some dramatic price swings in the short term. The likes of Twitter and Facebook have done well as public companies and it’s very possible that Reddit will end up joining them in the long run.
That’s because Reddit is one of the most popular websites in the world with a user base that’s growing all the time. Its users are also loyal and have already shown the potential to drive the prices of stocks they like up into the stratosphere.
However, Reddit stock is likely to be expensive right out of the gate. As stock prices tend to be volatile over the first few months after an IPO, it’s possible to lose lots of money quite quickly and it might be safer to wait until the price settles down. The risk of doing that, of course, is that you might miss out on some gains in value.
How has the company performed in recent years?
As the company isn’t public yet, we don’t know too much about the state of its finances. Companies that list on a stock exchange have to provide investors with quarterly and annual financial reports. Until we have a few years of those it’s difficult to judge the bottom line.
What we can judge is how well the Reddit website itself has done. By 2021, it was hosting more than 50m active users every day, a 44% increase on the year before. All that traffic, and the rate of growth, means that the company plans to generate $1bn in advertising revenue by 2023.
It is worth noting that its advertising income hasn’t been anywhere near that amount just yet. The most recent figure was just $100m, a relatively small amount for a website with so many users.
Is it a good time to buy Reddit shares now?
Remember that you can’t get shares just yet. When you can, be aware that investing in IPOs can be quite a risky business. It’s difficult to predict which ones are going to do extremely well and which will flop, so it isn’t always the right move to dive in on opening day.
In this case, there’s the added uncertainty of the Reddit users themselves. The community that posts at r/WallStreetBets have shown how much of an impact they can have on the market by turning companies like GameStop into meme stocks. It’s possible something similar happens to Reddit when they get the chance to essentially invest in themselves.
Whether you want to wait to buy shares, or put your money into Reddit straight away, it’s important to track the fortunes of the company. Use the links below to follow the latest news so that you can react to any new developments that might affect your investment.
Buying, selling and trading Reddit shares for beginners
What to do before buying shares
You should always take the time to research a stock fully before investing your money, especially if you haven’t bought shares before. The more knowledge you have, the better your chances of making a wise investment.
With that in mind, here’s a checklist to run through before you start.
- Research the company. You should always examine the fundamentals of a company first. What is Reddit? How did the company get its start? How did it grow? Is Reddit’s revenue and profit growth picking up? Is the company innovating? The more you know about Reddit, the better positioned you’ll be to make smart investment decisions.
- Make sure you understand the basics of stock investing. Before getting involved in the stock market, make sure you have an understanding of how it works. This will ensure that you have more clearly defined goals and have thought through how you will achieve them.
- Decide between share dealing and CFD trading. Choose the type of investment strategy you want to pursue, and make sure you have carried out the necessary fundamental or technical analysis for share dealing and CFD trading respectively.
- Set the size of your budget. The golden rule of investing is never to risk more than you can afford to lose. Not every investment you make will result in a profit, so it is important to set a budget that not only allows good potential for capital growth, but also protects against overly damaging losses.
- Find the right broker. Individual brokers each have their own pros and cons. Some will have low fees but have a user interface you struggle to understand, whereas others may be a bit more expensive but come with a range of features that you want to take advantage of. Our reviews can help you find the right broker for you.
- Examine broader market conditions. No stock exists in a vacuum, and it’s always important to analyse the general trends of the stock market as a whole before investing. If a bear market is setting in and stock prices are falling, it’s best to wait it out and invest your money later when the stock is cheaper. If, however, the market is looking bullish, you’ll want to make your investment quickly to get the maximum benefit from rising stock prices.
What is the difference between buying, selling, and trading shares?
If you’re new to stock investing, then it’s important to understand the basics of how to buy, sell, and trade Reddit shares. Here’s a quick run-through of what’s involved in each.
This process involves finding a broker and placing an order for Reddit stock, as outlined in the steps further up this page. Ideally you want to time your investment when the stock’s price is low so that you can profit by selling the shares after they increase in value.
When you sell any Reddit shares you have bought, you’ll want to do so at a higher price than the one at which you bought to earn a profit.
When you sell is up to you. You might decide to hold for a long period of time, hoping to benefit from the company growing steadily throughout. Or, if you see that Reddit’s stock is already up a lot compared to the price you bought it and you’ve noticed that the stock market is starting to fall, it might make sense to sell and take your profits to invest elsewhere. Equally, if the stock has fallen since you bought it and looks set to fall further, it might be a good idea to cut your losses by selling your shares.
Trading is the same process, it’s just done over shorter periods of time with the aim to make small profits on a regular basis. This means that you can make money faster and spend your profits in your day-to-day life – however, on the other side it means you can lose money faster as well. For inexperienced investors, we generally recommend making investments for at least 6 months to a year instead of making trades in quick succession.
You can trade Reddit shares through buying and selling shares, or by trading with CFDs. These allow investors to speculate on stock prices and trade with leverage in pursuit of bigger gains. CFDs trading is explained further in the next section, but it is worth noting that beginners should avoid trading with leverage. It comes with large risks and is best left to experienced investors.
Share dealing vs CFD trading
When it comes to investing in any stock, the two options you have are share dealing and trading. Which one of these methods to opt for largely depends on your investment timeline, with investors thinking long term tending to go for share dealing, and those looking for short term gains pursuing a more aggressive trading strategy.
Here’s a quick summary of the two approaches, and the pros and cons of each.
Share dealing refers to the practice of buying and holding shares in a particular company over the long term. When investing like this, you’re seeking to profit either from dividend payments or an increase in the stock’s price over time.
When investing your money this way, it is important to do thorough fundamental analysis of the company in which you are investing. You want to put your money in a stock you believe will trend upwards over time, even if there is some market volatility along the way, rather than get distracted by shorter term peaks and troughs.
- Can build wealth over time to achieve financial goals
- Don’t need to be very reactive to short-term market movements
- Some stocks will give you an income through regular dividend payments
- Takes a long time to realise any profits
- Your capital is tied up in stocks and cannot be used for other investments
If your aim is to generate profits in the short term, then you might be better off trading shares than holding them in your portfolio. Stock trades like this are executed using CFDs (contracts for difference), which allow investors to trade against the value of a stock without having to take ownership of it. When CFD trading, investors are looking to buy and sell stocks fast to profit from short-term fluctuations in value.
One aspect of CFD trading that many investors find attractive is that they allow you to trade with leverage. This means you can place large trades while only putting up a fraction of the value yourself – for instance, if a platform offered leverage of 1:10, you could put £10 into Reddit shares and be able to trade £100 worth. This can maximise profits if the market moves in your favour, but be careful as it can also lead to heavy losses.
When trading using CFDs, it is key to be skilled at technical analysis and reading stock price charts. As you’re trading stocks quickly and frequently, the fundamental strength of the company in which you’re investing isn’t as important as being able to predict how its stock price will rise and fall minute-by-minute.
- Can generate fast profits if you read the market right
- Some platforms allow you to trade with leverage
- Prevents your capital being tied up so you can take advantage of investment opportunities
- Trading with leverage is risky and can lead to big losses
- Doesn’t necessarily generate growth over the long term
Consider which approach suits you best and craft an investment strategy that works for you. If you need more information, then simply take our course on how to trade stocks.
How to choose a broker
With the wide variety of online brokers available these days, it can be hard to figure out which is the best service to go with. Our comparison table and in-depth reviews can help you cut through the noise, but by and large these are the aspects you should be considering when selecting a broker:
- Range of stocks available. The most important thing is that you can actually use the broker to find the shares you’re looking for. Some brokers offer more stocks than others, and many will allow you to trade other assets, such as forex and commodities.
- Fees and commissions. You want to keep as large a chunk of your profits as you can, so it’s important to make sure your broker doesn’t charge high fees that can eat into your profits.
- Regulation. You should only use regulated brokers. Unregulated brokers can be risky and offer little to no protection if the business were to fail while you had funds in your account.
- Payment methods available. You might want to fund your trading account using a specific payment method, such as PayPal. Not all brokers accept every payment method, but using our comparisons you can search only the brokers that support the option you’re looking for.
- Reputation. One of the strongest indicators of a broker’s reliability is the reputation it has with the customers who have used it. Brokers are online businesses, and as such many user experiences can be found online. You can check these out in addition to our reviews to make sure you choose the right platform.
- Customer service. As you’re going to be investing your money using the platform, you want to check that the broker offers good customer service in case you have a query or something goes wrong.
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Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >