Reddit files for an IPO, seeks to trade on NY Stock Exchange

Reddit disclosed $90.8 million in losses and revenue growth of roughly 21% in 2023 on Thursday, as the social media company made public its IPO filing ahead of a planned stock market debut in March.

The initial public offering filing comes almost two decades after Reddit’s launch and will be a major test for the platform that still lags the commercial success of social media contemporaries such as Facebook and Twitter, now known as X.

Reddit said it had an average of 73.1 million daily active users and 267.5 million weekly active users in the three months ended Dec. 31, 2023. The company said over 100,000 active communities used its platform, which had 1 billion cumulative posts.

In the filing, Reddit reported a net loss of $90.8 million for the year ended Dec. 31 and logged revenue growth of $804 million, up from $666.7 million a year earlier.

The IPO filing comes almost two decades after Reddit’s launch. REUTERS

Reddit was valued at $10 billion in a funding round in 2021 and it is unclear what valuation the company will aim for during its share sale in the coming weeks. It is expected to seek a sale of nearly 10% of its shares in the IPO, Reuters reported earlier.

The IPO filing showed CEO Steven Huffman holds Class B common stock that is issuable upon achieving a vesting condition – that Reddit attains $5-billion market capitalization valuation after the offering.

The social media firm is reportedly expected to hit the valuation target from the get-go.

Reuters reported on Wednesday, citing sources, that San Francisco-based Reddit has struck a deal with Alphabet’s Google to make its content available to train the search engine giant’s artificial intelligence models.

The contract is worth about $60 million each year, according to one of the sources.

The San Francisco-based company is moving towards one of the most highly anticipated listings of the last few years as the US IPO market thaws amid easing fears of a recession and growing hopes of a soft landing for the economy.

Founded in 2005 by web developer Huffman and entrepreneur Alexis Ohanian, husband of tennis champion Serena Williams, Reddit has been backed by several marquee investors, from venture capital giant Andreessen Horowitz to China’s tech behemoth, Tencent Holdings. Rapper Snoop Dogg is also an investor in the company.

Since being spun off from magazine conglomerate Conde Nast in 2011, Reddit became best known for its niche discussion groups and its users voting “up” or “down” for content other members posted.

Reddit CEO Steven Huffman
Reddit CEO Steven Huffman founded the company in 2005 House Financial Services Committ

It has made efforts in recent years to freshen its appeal among younger users through its acquisition of TikTok competitor Dubsmash in 2020.

The company, which generates its revenue primarily through advertising and also offers premium access for a monthly fee, has yet to turn a profit, Huffman said in a Reddit post last June.

Reddit had confidentially filed for the IPO in late 2021, but tough economic conditions and the poor performance of listed technology stocks had compelled it to delay the offering.

Morgan Stanley and Goldman Sachs have been tapped as the lead underwriters for Reddit’s IPO, which includes more than a dozen other banks.

The company plans to list its shares on the New York Stock Exchange under the ticker symbol RDDT.

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