By
Bhushan Akolkar
April 25th, 2024
The planned IPO also poses a test for Reddit users to show their loyalty to the platform.
Reddit, the renowned social media platform, is on the brink of launching its initial public offering (IPO) in March to enter the stock market after three years of contemplation. According to a Reuters Thursday report citing people familiar with the matter, the company confidentially filed for its IPO in December 2021, hoping to make it public in February 2024.
Reddit to Sell 10% of Its Shares to Investors
The IPO process is anticipated to begin with a roadshow in early March, and it is projected to end with the actual completion of the IPO in the same month.
The San Francisco-based company plans to offer approximately 10% of its shares during the IPO, with the specific valuation to be determined closer to the listing date. In 2021, the social media platform was valued at around $10 billion following a financial round led by Fidelity Management with participation from other venture capital companies.
Last year, the company unveiled its plans to generate over $800 million in advertising revenue, indicating the potential valuation it expects to raise during the IPO.
Reddit’s upcoming listing is expected to be the first of a major social media company to debut into the stock market since Pinterest’s launch in 2019. The move will place the social media platform in direct competition with Pinterest.
Both platforms, originating from the United States, share the common goal of navigating the competitive realm of online interactions and content sharing to generate profits.
Reuters said that despite the company’s careful planning, the IPO timeline might be delayed for undisclosed reasons.
A Test for Loyalty
The planned IPO also poses a test for Reddit users to show their loyalty to the platform. According to Reuters, investors who engage with the social media platform have significantly contributed to the past surge in “meme” stock for some major companies, including GameStop and AMC Entertainment Holdings.
Insider sources believe this distinctive characteristic adds an element of unpredictability to Reddit’s upcoming market debut, setting it apart from its predecessor, Pinterest.
In the broader context of social media stocks, the industry has witnessed a rebound, with technology stock rallies contributing to significant gains.
Meta Platforms, the parent company of Facebook, saw its shares triple in value over the past 12 months, while Snap experienced a 60% rise during the same period. Reddit was founded by Steve Huffman and Alexis Ohanian in 2005. Since then, the company has gained popularity among users for its niche discussion groups and user-driven content curation.
The social media platform faced backlash when it announced charging companies for access to its application programming interface (API), impacting users relying on third-party apps for Reddit access.
In June 2023, the company’s CEO said the firm, which offers premium access to its platform for a monthly subscription of $5.99, has yet to turn a profit for over a decade.
Historically, the company has linked its financial setbacks to investments in the platform and a lower level of user interaction with advertising on its site compared to other social media platforms.