Reddit, an online message board, took an unconventional approach leading up to its planned initial public offering (IPO) this week. Instead of adhering to the typical practice of exclusively selling shares to large investors, Reddit extended an invitation to some of its dedicated users to participate in purchasing shares.

This decision marks Reddit’s alignment with a small but expanding movement among companies to adopt a more democratic approach to distributing IPO shares. The objective is to recognize and reward loyal users and customers by offering them the opportunity to invest in an IPO, alongside institutional investors.

Cody Slach, senior managing director of Gateway Group, an investor relations and public relations advisory firm, remarked, “It’s not very common, but as markets change, the IPO process will evolve. The institutional audience has in the past dominated this space, but with the rise of retail investing, it’s hard to ignore that this part of the market is growing and smart and cares.”

Over the last five years, companies like Uber, Airbnb, and Cava have implemented similar directed share programs, allowing certain stakeholders such as drivers, hosts, and top rewards members to participate in their respective IPOs.

Reddit, set to commence trading on March 21, allocated up to 1.76 million shares, accounting for 8% of the total available shares in the IPO, to its users at an anticipated price range of $31 to $34 per share. This represents 1% of the company’s total shares. Reddit users, commonly known as Redditors, had the opportunity to place orders for shares on Tuesday before the commencement of public trading.

However, whether Redditors will indeed purchase the stock remains uncertain. Many who discussed the option online expressed disinterest due to perceived risks and doubts about Reddit’s long-term revenue potential, particularly regarding its heavy reliance on advertising.

While some Redditors admitted they might buy shares for entertainment purposes, others speculated that members of WallStreetBets, a notorious Reddit group, could potentially inflate Reddit’s share price immediately after the IPO, as they did with GameStop and other stocks during the pandemic.

In addition to offering Redditors the chance to buy IPO shares, Reddit has made its stock information accessible on its platform. It established a subreddit where it intends to share news, earnings releases, and information about earnings calls, allowing any Redditor to pose questions to company executives. Furthermore, the company plans to conduct “ask-me-anything” (AMA) sessions, a format familiar to Redditors, where the executive team will address financial inquiries.

Rosebud Nau, a capital markets lawyer and partner at Haynes Boone, remarked, “Reddit is about community. There could be concern about if the IPO will change the nature of Reddit and how that could impact the community. Maybe giving people the opportunity to participate helps maintain that community feel.”

The risks and rewards of directed share programs

Typically, companies have reserved directed share programs for their executives, board members, and sometimes extended them to their relatives, acquaintances, and employees. Such initiatives aim to grant employees a vested interest in the company and acknowledge—and potentially reward—key stakeholders. Family and friends of executives have had access to this option for over two decades.

However, offering a directed share program as part of an IPO can pose risks for companies. In some instances, IPO shares experience a decline in value immediately after public trading begins, potentially resulting in financial losses for new shareholders.

Rosebud Nau, in a conversation with Fortune, highlighted the potential outcomes: “If the stock price rises and [users] can sell for a profit, it rewards those who are important to the company. Conversely, a drop in stock price could lead to dissatisfaction among participants—some of the company’s most loyal customers or users.”

One concern arises from Reddit’s decision to allow Redditors participating in the directed share program to sell their shares immediately after the IPO, which experts caution could increase volatility in Reddit’s stock. Typically, early investors, including company executives, are subject to lock-up periods—typically between 30 and 60 days—during which they cannot sell their shares. This measure aims to safeguard buyers of IPO shares or those acquiring shares shortly after, preventing a sudden influx of sales that could depress stock prices.

Taylor Wirth, a corporate securities lawyer and partner at Barnes & Thornburg, explained, “Shares being immediately resold to the market increases volatility in Reddit’s stock.” A significant sell-off following a stock surge, for instance, may occur if a large group of Redditors opt to sell their shares for immediate profits, potentially leading to a decline in price.

Reddit may have conducted analyses to assess the impact of a potential flood of shares entering the market simultaneously, Nau suggested. Alternatively, they might have deemed the risk acceptable, believing in the company’s long-term prospects despite potential short-term fluctuations.

Results from directed share programs have varied in recent years. For example, Airbnb offered shares to U.S.-based hosts during its IPO in 2020, leading to substantial gains due to the company’s strong financial performance and increased post-pandemic travel demand. Conversely, Uber’s IPO in 2019 resulted in initial stock price declines, with shares trading below the IPO price for an extended period before rebounding.

Not all IPO companies opt for directed share programs, as seen with DoorDash and Instacart, which took different approaches to engage stakeholders. Turo, expected to go public later this year, plans to offer IPO-priced shares to users who rent out their personal vehicles through the platform.

Regardless of the approach taken, Reddit’s IPO follows a two-year drought in newly public tech companies, largely attributed to economic uncertainty and the pandemic. The performance of Reddit’s newly public shares could influence the resurgence of IPOs in the tech sector.

Cody Slach expressed optimism regarding Reddit’s potential impact on market perception: “If Reddit demonstrates profitability, its stock could see positive movement, potentially inspiring other companies to explore directed share programs for their users and customers.”

In summary, while Reddit’s lack of profitability may raise concerns, a successful performance in the market could pave the way for broader adoption of directed share programs among companies.