Reddit Files Initial Public Offering

Facts

• Online forum platform Reddit filed an initial public offering (IPO) prospectus with the Securities and Exchange Commission (SEC) on Thursday, paving the way to become a publicly traded company on the New York Stock Exchange (NYSE) under the ticker symbol 'RDDT.'¹
• Expected to hit the market next month, Reddit has been looking to go public for years. Its listing will be the first major tech IPO of 2024 and the first social media IPO since Pinterest in 2019.²
• According to the S-1 filing, Reddit’s 2023 revenue was $804M, up 21% from the previous year, and it had a net loss of $90.8M, down from $158.6M in 2022. The company had more than 500M visitors in Q4 of 2023 and averaged 73.1M daily active unique users.³
• In a nod to its most loyal users, Reddit will allow certain long-time Redditors to purchase shares in the IPO — a right usually reserved for institutional investors. The largest shareholders of Reddit are Advance Publications, PRC tech company Tencet, and OpenAI CEO Sam Altman.⁴
• Altman owns 8.7% of Reddit, and the IPO filing comes just one day after the platform signed a $60M per year deal with Google to license its content for AI training. It also shows that CEO Steve Huffman, who co-founded the platform in 2005, earned $286M in 2023.⁵
• The form doesn't list the number of common stock shares available, and a price range hasn't been established. The filing has yet to take effect, and major banks including Morgan Stanley, Goldman Sachs, J.P. Morgan, and BofA Securities are acting as lead book-running managers.⁶

Sources: ¹Forbes, ²The Guardian, ³Variety, ⁴NPR Online News, ⁵Business Insider and ⁶Yahoo Finance.

Narratives

• Narrative A, as provided by Verge. Not only is Reddit’s long-awaited IPO a huge boon for company executives and institutional investors, but it is also a win for ordinary Reddit users who will have the unique ability to buy shares in the initial offering. Reddit is a platform made up of communities, and the company is showing how much it values its community at large. Powered by its millions of users and high-profile investors, there's little doubt that Reddit's public debut will be a success.
• Narrative B, as provided by CNBC. While Reddit may be doing a nice thing for its loyal users by offering them the opportunity to buy shares in its IPO, the goodwill offer makes the company’s entire deal riskier. IPO investors typically have extensive experience and knowledge, and allowing novices to get in the game could make things worse for them as well as the company. A social media company that records net losses is already volatile, and allowing users to invest in the IPO makes Reddit an even riskier bet.

Predictions