Reddit Gets Over Cold Feet, Files for IPO

In unusual move, top users will have a chance to grab up shares
By Arden Dier,  Newser Staff
Posted Feb 23, 2024 7:56 AM CST
Reddit Overcomes the Jitters, Files for IPO
This June 29, 2020 file photo shows the Reddit logo on a mobile device in New York.   (AP Photo/Tali Arbel, file)

"The world's most popular message board" is going public. Reddit, which abandoned plans for an initial public offering a couple of years ago, filed for an IPO on Thursday, reports NPR. Founded in 2005 by University of Virginia dormmates Alexis Ohanian and Steve Huffman, the social media site counts 76 million daily visitors across more than 100,000 communities, according to its filing with the Securities and Exchange Commission. It proposes being listed on the New York Stock Exchange under the symbol "RDDT, and is seeking to sell off about 10% of its shares, per Reuters. Yet to record a profit, the company reported a net loss of $90.8 million last year, with $804 million in annual revenue, up 21% from 2022, per Investopedia.

The company, whose business is based on ad sales, stresses the growing digital advertising market and potential of licensing data. It claims to have made $203 million from data licensing arrangements as of January, per Tech Crunch. And on Thursday, Reddit announced it would make its content available to train Google's artificial intelligence models in a deal valued at $60 million annually, per Reuters. Huffman says he hopes the IPO will benefit investors—chief among them Condé Nast owner Advance Publications, Chinese tech company Tencent, and OpenAI CEO Sam Altman, per NPR—as well as users. Top users, in fact, will have a chance to purchase shares in the IPO—"a privilege usually reserved for professional investors," per the Verge.

"Our users have a deep sense of ownership over the communities they create on Reddit," the filing reads, per CNBC. "We want this sense of ownership to be reflected in real ownership—for our users to be our owners." However, user investors at Reddit, home of the meme stock craze, "could result in increased volatility in the market price of our Class A common stock," the filing states. While most other IPO investors agree not to sell their shares immediately after trading begins, user investors won't have to agree to a lock-up period. Reddit will invite eligible users to participate. Shares will then be allocated through a tiered system based on a user's "karma," or reputation score. The Verge has more on that here. (More Reddit stories.)

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