Reddit submits paperwork for IPO before stock market debut
The platform’s expected listing in March would mark the largest IPO by a social media company since Pinterest’s public offering in 2019
Reddit readies for its much-anticipated stock market debut, poised to launch the largest IPO by a leading social network in four years. In a filing with the Securities and Exchange Commission on Thursday, the social media group disclosed its financial performance and revealed that Sam Altman, the founder and CEO of OpenAI, holds the third-largest stake at 8.7%.
The company intends to trade on the New York Stock Exchange using the ticker symbol “RDDT.” Its highly anticipated listing, anticipated in March, would be the largest social media IPO since Pinterest’s public offering in 2019.
Reddit stated in a statement that the number of shares to be offered and the price range for the proposed offering have not yet been determined.
The IPO filing disclosed that Reddit incurred losses of $90.8 million in 2023, a decrease from $158.6 million in 2022, despite a revenue increase of approximately 21%. The platform reported having 267.5 million active weekly users, over 100,000 active communities, and 1 billion total posts.
The company estimated its US average revenue per user (ARPU) at $3.42 for the last quarter of 2023, a 2% decrease compared to the previous year.
Advance Magazine Publishers holds the largest stake in the company, with 30.1%, while the Chinese multinational Tencent owns 11%.
Reddit’s upcoming IPO arrives nearly two decades after its inception and represents a significant trial for the platform, which still falls behind the commercial success of social media giants like Facebook and Twitter, now known as X.
The filing also unveiled an unusual initiative from Reddit to allow its most active users to purchase shares in the IPO. Reddit will distribute shares through a tiered system, rewarding users who have made significant contributions to Reddit community programs, those who have completed a certain number of moderator actions, and individuals with a minimum “karma” score—points awarded by others on the platform for their content contributions.
Reddit was valued at $10 billion in a funding round in 2021, but it’s uncertain what valuation the company will target for its upcoming share sale. Reuters previously reported that Reddit is likely to seek to sell nearly 10% of its shares in the IPO.
In the filing, Reddit mentioned data licensing arrangements as a revenue source, stating that it had entered into such agreements in January 2024 with a total contract value of $203 million. Reuters reported on Wednesday that Reddit had struck a deal with Alphabet’s Google to provide its content for training the search engine giant’s artificial intelligence (AI) models. According to one source, the contract is valued at approximately $60 million annually.
“Reddit data continuously expands and refreshes as users engage with their communities and each other,” Reddit stated in its filing. “We believe our expanding platform data will play a crucial role in training leading large language models (‘LLMs’) and serve as an additional revenue stream for Reddit.”
Reddit confidentially filed for its IPO in late 2021, but challenging economic conditions and the underperformance of listed technology stocks forced it to postpone the offering.
Morgan Stanley and Goldman Sachs have been selected as the lead underwriters for Reddit’s IPO, alongside more than a dozen other banks.
