Social media platform Reddit wants to launch its first IPO in March
By Echo Wang and Anirban Sen
Social media platform Reddit has laid out detailed plans to launch its initial public offering (IPO) in March, moving forward with a listing it has been eyeing for more than three years, according to people familiar with the matter.
It would be the first IPO by a major social media company since Pinterest’s debut in 2019, and would come as Reddit and its peers face intense competition for ad dollars from the likes of TikTok and Facebook.
The offer would also test the willingness of some Reddit users to support the company’s stock market debut. Many investors posting on the platform have fueled dozens of “meme” stock rallies over the past three years, from retailer GameStop to movie operator AMC Entertainment Holdings.
Reddit, which confidentially filed for an IPO in December 2021, plans to make its IPO public in late February, launch its roadshow in early March and complete the IPO in late March, two sources said.
The San Francisco-based company, which was valued at about $10 billion in a 2021 funding round, is seeking to sell about 10% of its shares in the initial public offering, the sources said. According to the sources, the company will decide closer to the stock exchange listing what valuation it will pursue for the IPO.
The sources warned that Reddit’s IPO plans could be delayed, as has happened in the past, and asked not to be identified discussing confidential deliberations.
A Reddit spokesperson declined to comment.
Founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit became best known for its niche discussion groups and its users voting “up” or “down” on content posted by other members.
The company, which generates its revenue primarily through ads and also offers premium access for $5.99 per month, has not yet turned a profit, Huffman said in a post on Reddit last June.
In the past, the company has attributed its losses to investments in the platform and its users engaging less with advertising on the site than on other social media.
The company was hesitant to pull the IPO trigger until it got closer to profitability. Periods of market volatility that shut down the IPO market for much of the past two years also contributed to the plans being postponed.
Reddit expects to generate just over $800 million in ad revenue in 2023, up more than 20% from a year earlier, The Information reported last month.
Reddit said last year it would charge companies for access to its application programming interface (API), which is used by tech companies to train large language models used in artificial intelligence. This move upset some users who rely on third-party apps to access Reddit.
Major social media stocks have rebounded over the past year, largely thanks to a rally in technology stocks as interest rates spiked. Shares of Meta Platforms, which operates Facebook, have more than tripled in value in the past 12 months, while shares of Snap have risen 60% in the same period.
First print: January 18, 2024 | 6:49 PM IST