Reddit Scheduled for Its Initial Public Offering (IPO)

Online platform Reddit has announced its forthcoming entry into the stock market with an IPO priced at $34 a share. The company’s market debut, which will make use of the ticker symbol “RDDT,” is expected to prompt considerable chatter across social media platforms including Reddit itself. The move to go public represents a significant shift for the service, which will need to demonstrate its capacity to build a viable business model and ameliorate ongoing issues related to management turbulence, regular user protests, and nearly two decades of unbroken losses.

Despite its flaws and historical reliance on investment funding, Reddit’s sizeable user base drives interest in its platform. In December alone, the platform hosted 76 million users across roughly 100,000 communities discussing diverse topics. Prior to going public, Reddit set aside 1.76 million of its 15.3 million shares for users of its services. The majority of remaining shares are set to be purchased by mutual funds and other institutional investors wagering on Reddit’s financial future.

Reddit’s financial potential has attracted several high-profile endorsements, including OpenAI CEO Sam Altman, who owns 12.2 million shares of Reddit stock—one of the largest stakes in the company—and other early investors such as Peter Thiel, Jared Leto, and Snoop Dogg. However, from a tech industry perspective, Reddit remains extremely small for a company with its lengthy background. With stock priced at $34 per share, Reddit’s market value is expected to reach $6.4 billion, far behind Meta’s $1.2 trillion, despite the latter only launching 18 months earlier.

Perhaps one of the most significant challenges for Reddit as a public company is its shaky financial history. The company has never managed to generate a profit in its many years of operation, and its total losses have reached an impressive $717 million. While its revenues have grown considerably from $229 million in 2020 to $804 million in 2021, it continues to operate at a loss. In light of its upcoming IPO, Reddit has stated that it plans to boost revenue with increased ad sales on its platform, licensing agreements similar to its $60 million deal with Google, and capitalising on the e-commerce activity taking place on its platform.

In terms of its leadership, Reddit has seen its share of turmoil. Co-founders Steve Huffman and Alexis Ohanian both left the company in 2009, when it was still under Conde Nast’s control. Both returned to the company later, with Huffman currently serving as CEO, a position he resumed in 2015 following then-CEO Ellen Pao’s resignation. Amid the company’s management changes and other hurdles, Huffman acknowledged its past struggles but expressed optimism for the future.