Social media forum Reddit, which has been around for nearly 20 years, is finally going public. An SEC filing released today shows that the corporate wants to raise up to $748 million in its upcoming stock launch — which might place its valuation at up to $6.5 billion.
Reddit plans to sell 22 million shares at $31 to $34 per share, according to the filing. The corporate has marked out about 1.76 million shares for its most invested users.
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Reddit recorded multiple billion posts and 16 billion comments in total from users through the tip of last 12 months, as per the filing. The location drew greater than 500 million monthly visitors in December 2023 alone.
Reddit Inc. co-founder and CEO Steve Huffman. Photo by Zach Gibson/Getty Images
Semrush data reveals that Reddit was the third most visited website in the U.S. in December 2023, beating Facebook with a difference of about 535 million views. Twitter, Instagram, and TikTok lagged behind at tenth, thirteenth, and seventeenth place, respectively.
Reddit may very well be the primary major tech initial public offering (IPO) of 2024. The filing brings up the professionals and cons of the platform and the worth it offers to users and investors.
Reddit’s Value
Throughout the filing, Reddit emphasized aspects that set its platform aside from its competitors, with the word “trust” appearing nearly 100 times in the filing and “authentic” appearing 39 times.
“Reddit’s community ecosystem is organically built upon shared interests, passions, and trust slightly than friends, celebrities, and their followers,” read the document. “This distinction results in a novel sense of belonging, privacy, and authenticity for our users.”
Artificial intelligence was also something Reddit directly addressed, labeling the positioning’s content “a foundational part” of coaching leading AI models available on the market. Reddit has also internally created AI to address onboarding, translation, and content moderation.
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“Our massive corpus of conversational data and knowledge is what makes us unique, and we consider its value will proceed to grow over time as our user-generated data continues to grow,” Reddit wrote.
Reddit’s Risks
Within the filing, Reddit also identified multiple events that might harm the corporate’s growth. Industry competitors, lower-quality ads, technical problems, inappropriate uses of the platform, and negative publicity were all aspects the corporate listed.
Reddit warned in the filing that its community’s participation in its IPO could cause “increased volatility” in the value of its stock. Redditors have manipulated low-performing stock or “meme stock” before, with GameStop being a notable example that lost institutions billions of dollars.
Reddit has also never returned a profit, and the corporate cautions that it might need net losses in the long run. As of December 2023, Reddit had a deficit of about $716.6 million.
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The location continues to be in its early stages of generating revenue, and its ability to make a profit is determined by scaling its promoting business and trying out other ways of generating revenue. Reddit’s filing shows that there is no guarantee that the corporate will succeed in getting non-advertising revenue.