The social media forum Reddit, which has been around for almost two decades, finally goes public. A SEC PRESENTATION published today shows the company wants to raise up to $748 million in its upcoming stock offering — which would put 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 company has registered about 1.76 million shares for its most invested users.
Reddit logged more than a billion posts and 16 billion comments in total from users by the end of last year, according to the filing. The site attracted more than 500 million monthly visitors in December 2023 alone.
The co-founder and CEO of Reddit Inc. Steve Huffman. Photo by Zach Gibson/Getty Images
Semrush data REVEALS that Reddit was the third most visited site in the US in December 2023, beating Facebook by a margin of about 535 million views. Twitter, Instagram and TikTok lagged behind at 10th, 13th and 17th, respectively.
Reddit could be the first tech initial public offering (IPO) of 2024. The filing brings up the pros and cons of the platform and the value it offers to users and investors.
The value of Reddit
Throughout the presentation, Reddit emphasized the factors that set its platform apart from its competitors, with the word “trust” appearing nearly 100 times in the filing and “authentic” 39 times.
“Reddit's community ecosystem is organically built on shared interests, passions, and trust rather than friends, celebrities, and their followers,” the document states. “This distinction results in a unique sense of belonging, privacy and authenticity for our users.”
Artificial intelligence was also something Reddit directly addressed, labeling the site's content “a fundamental part” of training the leading AI models on the market. Reddit has also built in-house AI to address onboarding, translation and content moderation.
“Our massive corpus of conversational data and insights is what makes us unique, and we believe its value will continue to grow over time as our user-generated data continues to grow,” Reddit wrote.
The perils of Reddit
In the filing, Reddit also identified multiple events that could hurt the company's growth. Industry competitors, lower quality ads, technical issues, inappropriate uses of the platform and negative publicity were all factors the company listed.
Reddit warned in the filing that its community's participation in its IPO could cause “increased volatility” in its stock price. Redditors have previously manipulated underperforming stocks or “meme stocks” with GameStop being an obvious example that the institutions lost billions of dollars.
Reddit has also never turned a profit, and the company warns that it may incur net losses in the future. As of December 2023, Reddit had a deficit of approximately $716.6 million.
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The site is still in the early stages of generating revenue, and its ability to make a profit depends on scaling its advertising business and trying other ways to generate revenue. Reddit's filing indicates that there is no guarantee that the company will be successful in obtaining advertising revenue.