Reddit to IPO in March
Social media platform Reddit has detailed plans to launch its initial public offering (IPO) in March, moving toward a listing it has been eyeing for more than three years, Reuters reported.
This will be the first IPO of a major social media company since Pinterest debuted in 2019.
The offer will also test the willingness of some Reddit users to support the company’s stock market debut. Many of the investors who have posted on the platform have helped propel dozens of memes to the stock market over the past three years, from retailer GameStop to movie operator AMC Entertainment Holdings.
Reddit, which privately filed for an IPO in December 2021, plans to go public in late February, begin a pitch in early March and complete the IPO by the end of March, two sources said. The San Francisco-based company, which was valued at about $10 billion in a 2021 funding round, is looking to sell about 10 percent of its shares in the IPO, the sources added. According to the sources, Reddit will decide what valuation of the IPO it will conduct closer to the time of listing. The sources warned that Reddit’s IPO plans could be delayed, as has happened in the past.
A Reddit spokesperson declined to comment.
Founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit gets its revenue mostly from advertising and also offers premium access for $5.99, which Huffman says wasn’t profitable enough before. In the past, the company has attributed its losses to the fact that it invested in the platform, and its users engaged in advertising less on its site than on other social networks. The company held off on an IPO until it approached profitability. In 2023, Reddit is expected to receive more than $800 million in advertising revenue, which is 20% more than a year earlier, according to The Information.
Last year, Reddit said it would charge companies to access its application programming interface (API), which is used by tech companies to train AI.
Shares of social media majors have rebounded over the past year, driven largely by gains in tech stocks as interest rates peaked. Shares in Meta Platforms, which runs Facebook, have more than tripled in the past 12 months, while Snap shares have risen 60% over the same period.
We will remind you that we reported earlier that the Nasdaq ended 2023 with a 43% increase. These are the best indicators in the last 3 years.
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