Reddit set for IPO in March

The social media platform Reddit has devised comprehensive plans to proceed with its initial public offering (IPO) in March, marking a significant move after contemplating a listing for more than three years, as per a Reuters report. Reddit’s IPO, set to be the first major social media company to go public since Pinterest in 2019, comes amid intense competition for advertising revenue from platforms like TikTok and Facebook.

This IPO would also serve as a litmus test for the willingness of Reddit users, who have played a role in various “meme” stock rallies, to support the company’s stock market debut. Reddit filed confidentially for its IPO in December 2021 and is reportedly planning to make its public filing in late February, kick off its roadshow in early March, and complete the IPO by the end of March, according to insider information.

The San Francisco-based company, valued at around $10 billion in a 2021 funding round, aims to sell approximately 10% of its shares in the IPO. The specific valuation sought will be decided closer to the listing date. However, sources caution that Reddit’s IPO plans are subject to potential delays, a pattern observed in the past.

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit gained recognition for its specialized discussion groups and user-driven content ranking system. The company, primarily reliant on advertising for revenue, has yet to turn a profit, as acknowledged by Huffman in a Reddit post last June. Reddit’s losses have been attributed to continuous platform investments and lower user engagement with advertisements compared to other social media platforms.

The decision to go public was deferred until Reddit neared profitability, influenced by bouts of market volatility that disrupted IPO plans in the preceding two years. Despite generating revenue through advertising and offering premium access at $5.99 per month, Reddit has faced challenges in turning a profit. Last year, the platform announced its intention to charge companies for access to its application programming interface (API), causing discontent among users relying on third-party apps to access Reddit.

As Reddit prepares for its IPO, expected to raise funds by selling shares, the company eyes a pivotal moment in its evolution, and the market will be closely watching its trajectory in the competitive landscape of social media stocks.