The social media platform Reddit has created detailed plans for its initial public offering (IPO) in March.
The media, citing insiders, report that the mentioned company has been studying the prospects of listing for more than three years and trying to develop its own strategy in this direction.
The IPO of Reddit will be the first public offering of shares of a large firm operating in the sphere of social media since the debut of Pinterest in 2019. Listing in the current market realities is, in a sense, a necessity. In the foreseeable future, Reddit and other players in the virtual interaction platform industry will find themselves in a situation of fierce competition for so-called advertising dollars with giants such as Meta and TikTok.
The IPO is also a test of the willingness of some users of the specified social network to support the brand’s debut on the stock market. Many investors posting on this platform have contributed to dozens of so-called meme stock rallies over the past three years.
Reddit plans to publish its IPO application at the end of February and launch a roadshow in early March. The relevant information was published by the media with reference to sources.
During a funding round in 2021, San Francisco-based Reddit was valued at about $10 billion. The company aims to sell about 10% of its shares during the IPO. This information was also published by the media with reference to insiders.
The journalists’ informants noted that the plans of the social network platform for an IPO may be postponed, as it has already been in the past. Insiders used the right of anonymity, noting that the issue of the offering of shares is confidential.
A Reddit representative did not respond to a media request for IPO plans.
The social network was founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian. This digital platform is known for its niche discussion groups and users who vote for approval or condemnation of content published by other members of the corporate community.
Reddit’s main source of revenue is advertising. The company also offers users premium access for $5.99 per month. So far, this decision has not had a significant impact on the financial condition of the brand.
The company had to face losses. The brand’s management explained this by investing in the development of the digital platform and the fact that its users are less engaged with advertising compared to other social networks.
Reddit refrained from the IPO until the moment of approaching profitability. Periods of market volatility have become an obstacle to the implementation of the company’s relevant plans.
It is expected that the social network’s advertising revenue for 2023 will amount to more than $800 million. This figure is more than 20% higher than the result for 2022.
Last year, Reddit announced its intention to charge for access to its application programming interface, which is used by technology companies to teach large language models, applied in artificial intelligence systems. Many users reacted negatively to this decision.
In 2023, the value of shares of major players in the social media industry grew against the background of an increase in the price of securities of technology companies during the peak of interest rates. Meta’s shares have more than tripled in price over the past 12 months. The value of Snap securities increased by 60% in 2023.
As we have reported earlier, Reddit Launches Rewards Program for Moderators.
