Reddit, the popular social news aggregation and discussion website, is gearing up for its initial public offering (IPO) aiming to raise up to $748 million. This will be one of the year’s largest public offerings, with shares priced between $31 and $34 each.
The company’s journey to going public has been a long one, starting with a filing in 2021 when IPOs were booming. Back then, Reddit’s valuation stood at $10 billion, with some speculating it could reach $15 billion upon going public.
Unique Features and Potential Risks
A noteworthy aspect of this IPO is Reddit’s allocation of shares for purchase by users and moderators with accounts created before 2024. These shares will be freely tradable on the first day, allowing for immediate buying or selling. This active community involvement, however, presents both advantages and risks. The large and engaged WallStreetBets forum, for example, could significantly impact the stock price through coordinated selling.
Financial Performance and Growth Strategy
Despite showing revenue growth, Reddit remains unprofitable, reporting a net loss of $91 million in 2023. However, Reddit sees significant growth potential in advertising and data licensing, particularly for training AI models. The company recently secured data licensing agreements worth $203 million, with an expected minimum revenue of $66.4 million in 2024, adds NIX Solutions.
Looking Forward
Reddit’s IPO is set to be a notable event, not just for the size of the offering, but also for its focus on community involvement and innovative monetization strategies. With its loyal user base and focus on future growth, Reddit is poised to make a significant mark on the public market.