Directed Share Program (DSP)

A directed share program is an arrangement in which an IPO's underwriters set aside a block of shares, usually a small share of the total offering, to be bought at the IPO price by a specified group, traditionally a company's employees, directors and a "friends and family" circle. It lets favoured participants buy in at the offering price alongside large institutions, an opportunity not otherwise available to ordinary retail investors.

Reddit used a directed share program in its March 2024 IPO in an unusual way, reserving shares for long-tenured users and moderators rather than only insiders. Eligibility was limited to accounts created on or before 1 January 2024 and to United States residents aged eighteen or over who were not Reddit employees, with invitations rolled out in phased priority tiers keyed to contribution levels, such as moderators with thousands of logged mod actions or users with very high karma. Roughly 1.76 million shares, about eight percent of the offering, were reported as reserved this way, and, unusually, they were exempt from the post-IPO lock-up so recipients could sell immediately. Described neutrally, the directed share program is the structural mechanism by which Reddit invited its community into the offering; the separately documented moderator backlash concerns the wider question of compensating unpaid volunteers, not the mechanism itself.