It’s a social platform that sells stock in an IPO
Reddit: How Money is Needed to Survive Wall Street Trading Frustrations and Implications for Commodity Stock Markets
The company was valued at $10 billion when it first filed for an IPO. However, an unstable IPO market pushed back the company’s plans.
In its S-1 document, Reddit said it made $804 million in revenue last year, the vast majority of which came from advertising. However, the company is unprofitable, with a net loss of $90.8 million in 2023.
The chance to buy shares in its IPO is being given to a number of top users, including both moderators and those with high karma scores. That’s a privilege usually reserved for professional investors who want to buy stock at a theoretically lower price before everyone else gets to purchase it on the public market.
“Reddit represents one of the largest data sets of just human beings talking about interesting things,” Huffman told NPR in June. “We are not in the business of giving that away for free.”
The site charged some developers for access, which was included in the changes. Many angry communities boycotted the site because the change would kill third-party apps that they use to read and post. Critics argued the policy shift was an attempt to move users toward Reddit’s own app and away from third-party apps.
Reddit became the center of a stock market firestorm when a subreddit known as WallStreetBets helped organize small investors to send the stock of videogame retailer GameStop soaring to extraordinary highs, an event that prompted a Wall Street trading frenzy and put the spotlight on Reddit’s role in so-called meme stocks.
Efforts have been underway to rein in the most noxious material on Reddit and establish clear guardrails for keeping out the most noxious content, but moderators still make most decisions about what can be posted to the site.
In the crowded world of social media, Reddit has grown popular by amassing large, ardent followers to many of its so-called subreddits, or individual message boards, by allowing the communities to govern themselves.
Reddit, led by co-founder and CEO Steve Huffman, is expected to launch its official roadshow pitch to investors next month, at which time it will announce at what price it hopes to sell stock.
Condé Nast, which is owned by Advance Publications, is the company’s largest shareholder. The second shareholder is a Chinese tech company. Sam Altman, the CEO of ChatGPT maker OpenAI, is Reddit’s third-largest shareholder, according to the filing.
The site began as a place for anonymous discussion of culture and politics in 2005, when it was launched by Ohanian and his dorm mate, Steve Huffman. Over the years, its userbase has grown, with now 76 million people visiting the site daily across more than 100,000 communities, according to its filing to regulators.
