Reddit, the popular online forum known for its vibrant communities and often-hilarious content, is finally preparing to launch its initial public offering (IPO) in March, according to Reuters. This marks a significant milestone for Reddit, which has faced its fair share of challenges on the road to its public debut.
While the final valuation will be determined closer to the big day, sources suggest Reddit aims to snag a healthy $10 billion price tag by offering around 10% of its shares.
Reddit generated $800 million in ad revenue through 2023, an over 20% increase year-over-year despite projections of more than $1 billion, according to The Information.
If Reddit’s IPO goes well, it would be the first time a social media platform has become publicly listed since Pinterest in 2019.
Founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit became best known for its niche discussion groups and its users voting “up” or “down” on the content posted by other members.
The company, which generates its revenue primarily through advertising and also offers premium access for $5.99 per month, has yet to turn a profit, Huffman said in a Reddit post last June.
In the past, the company has attributed its losses to investing in the platform and its users engaging less with advertising on its site than other social media.
The company held back from pulling the IPO trigger until it came closer to profitability. Bouts of market volatility that shut down the IPO market for much of the last two years also contributed to it delaying its plans.
Reddit said last year it would charge companies for access to its application programming interface (API), which is used by technology companies to train large-language models used in artificial intelligence. The move upset some users who rely on third-party apps to access Reddit.
Large social media stocks have rebounded over the past year, driven mainly by a rally in technology stocks as interest rates peaked. Shares of Meta Platforms, which operates Facebook, have more than trebled in value over the past 12 months, while Snap’s, which opens new tabs, shares rose 60% over the same period.
(With inputs from Reuters)