Reddit Seeking IPO in March After Delay
One of the world’s most dominant social media companies, Reddit, is reportedly preparing for an Initial Public Offering (IPO) in March, a significant move three years after it began working with IPO advisors. The company has been eyeing an IPO for the past few years but keeps delaying its plans to go public due to unforeseen events.
The San Francisco-headquartered company plans to offer around 10% of its shares during the IPO. Reddit’s valuation, which stood at $10 billion following a 2021 funding round, will be disclosed around the time of the listing. If the IPO proceeds in March, it will mark the first major social media IPO since Pinterest’s in 2019. Pinterest went public at a $12.7 billion valuation, sold at $19 per share, and raised $1.6 billion from investors.
Established in 2005, Reddit has gained popularity as an online forum for diverse discussions across various subreddits. The company is being challenged regarding advertising revenues by some of the most prominent social media companies like TikTok and Meta.
Known for embracing technological advancements such as Web3 and artificial intelligence, the social media site has innovatively integrated cryptocurrency tipping and launched a nonfungible token program in 2022. Reddit’s IPO plans would also test the support of their users if they could back the company’s stock market debut.
The community, also known as Redditors, has proven their willingness to support a specific project as many investors are very active on the social media site, even helping the resurgence of stocks, such as the impressive rallies from retailer GameStop and the success of movie operator AMC Entertainment Holdings.
During the initial plans to launch an IPO, the company faced criticism for its decision to charge for access to its application programming interface (API), a tool vital for developing AI-based large language models. The alleged blunder by aggregator site on their announcement about the changes in API access resulted in the fleeing of over 2.5 billion Reddit users who went dark and caused Reddit to go offline.
Sources revealed to Reuters that Reddit confidentially filed for its IPO in December 2021, with plans for a public filing in late February and a potential launch in early March. This move was postponed until the company became profitable. Primarily fueled by advertising and premium subscriptions, Reddit is anticipated to generate approximately $800 million in advertising revenue in 2023.
However, as per Reuters, there remains uncertainty about the IPO’s timing, which could be subject to delays, as has been the case in the past. During the past year, large social media stocks have rebounded as Meta shares tripled in value while Snapchat’s shares rose 60% over the past 12 months.
Know More About Reddit
Reddit was founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian. Also involved in the site’s foundation is a controversial computer programmer and hacktivist, Aaron Swartz, after the original co-founders bought Swartz’s company Infogami and merged with Reddit.
The social news aggregation website is the 16th most-visited website in the world, according to SimilarWeb. A Y Combinator grant initially funded it and was even dubbed by Paul Graham as the front page of the internet. Graham is one of the founders of Y Combinator, a startup accelerator instrumental in launching Airbnb, Coinbase, Dropbox, and Twitch.
After one year of operation, the company was sold to and operated by Condé Nast Publications in 2006, a division of Advance Publications. Still, in 2011, it became an independent subsidiary of the magazine publisher Condé Nast. One of the most valuable tools of the website is the Subreddits that allow businesses and communities to target specific audiences, post engaging content, and drive conversations, increasing visibility and traffic.
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