Reddit, known as ‘front page of the internet,’ set to make stock market debut

By Staff

The company will begin trading Thursday on the New York Stock Exchange under the ticker symbol RDDT

Reddit, known as the ‘front page of the internet,’ is all set to make its first appearance on the stock market.

The company has priced its Initial Public Offering (IPO) at $34 per share. From Thursday, these shares will start trading on the New York Stock Exchange under the ticker symbol “RDDT.” This move is likely to spark lots of chatter on Reddit itself and other social media platforms.

The IPO will be a real test for Reddit. It’s had nearly 20 years of ups and downs, with losses, changes in management, and sometimes users not being happy.

But now it needs to show it can be a business that lasts. The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to existential worries, as well as get recommendations from like-minded people.

In December, about 76 million users visited one of Reddit’s roughly 100,000 communities, according to the rules that companies have to follow before they can sell shares to the public. Reddit is offering up to 1.76 million of its 15.3 million shares in the IPO to its users.

As is usually the case with IPOs, the rest of the shares are expected to be bought mainly by big investment funds. Reddit has attracted some high-profile supporters including Sam Altman, the CEO of OpenAI, who invested early and now owns 12.2 million shares in Reddit, making him one of the company’s biggest shareholders.

Other well-known investors include PayPal co-founder Peter Thiel, Oscar-winning actor Jared Leto, and rapper Snoop Dogg. However, none of these are listed as major shareholders as Reddit prepares for its IPO. Despite being around for a long time, Reddit is still quite small compared to other tech companies. With shares priced at $34 each, Reddit’s market value will be $6.4 billion.

In contrast, Meta Platforms, which started Facebook just 18 months before Reddit, has a market value of over $1.2 trillion and makes annual revenue of $135 billion. Reddit’s annual revenue is still less than $1 billion. There’s also another issue: Reddit has never made a profit despite its wide reach, and it has accumulated losses of $717 million. This is a significant increase from the cumulative losses of $467 million reported in December 2021 when Reddit first tried to go public.

The company attributes these losses to its recent efforts to find new ways to increase revenue. Reddit was sold to magazine publisher Conde Nast for $10 million shortly after it was created. This meant that Reddit didn’t have to operate as a separate business.

Even when Conde Nast’s parent company, Advance Magazine Publishers, made Reddit independent in 2011, the company didn’t start focusing on making money until 2018. Most of their efforts were around selling ads, which helped Reddit increase its yearly income from $229 million in 2020 to $804 million last year.

However, the San Francisco-based company also reported combined losses of $436 million from 2020 through 2023. In its IPO filing, Reddit shared a plan to sell even more ads. They believe companies will see the platform as a strong marketing tool because lots of people look for product recommendations there.

Reddit also hopes to make more money by letting other companies use its content in deals like the $60 million one Google recently made to help train its artificial intelligence models. But this plan faced a quick challenge when the U.S. Federal Trade Commission started looking into the deal.

Based on its IPO documents, Reddit’s management is hoping to profit from the increasing number of online purchases happening on its platform. The company stated: “We believe that over time, we can generate revenue based on the volume of commerce that is conducted on Reddit,” but didn’t give any more details.

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