The IPO Filing is missing something
Reddit: What is it, What’s going on? What is the strategy? How investors are pushing for the future of social media
Analysts say investors will now be pushing the company to show how it can be profitable, which so far it has not done. In the last three months of last year, Reddit had net income of $18 million and net losses of about $90 million, according to its Thursday filing.
“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 away anything for free.”
In recent months, Reddit has taken a number of controversial steps widely seen as preparing for a public offering, which it first indicated it had plans for in late 2021.
There were changes, one of which was a decision to charge developers access to the site. The move sparked a boycott among thousands of Reddit communities angered that the change would kill off third-party apps many use to read and post on the site. Critics argued that the policy shift was an effort to move users 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.
This laissez-faire approach has proven divisive. Fans of unfettered free speech have applauded the lack of centralized rules at rivals like Facebook and TikTok. But critics have chided Reddit for allowing online communities to spring up with toxic material, including harassment, racism and the leaking of private celebrity photos.
In the crowded world of social media, it’s not unusual for a site to have large, ardent followers in order to allow the communities to govern themselves.
According to the S-1, Huffman has accumulated shares totaling 3.3 percent of the site since returning as CEO. In a separate post on Thursday, Ohanian stated that he still has some shares from when he was the executive chair of the website.
The company said it is setting aside stock for individual investors. The users who are picked will be decided by their reputation on the platform.
Top users, including moderators, will be able to purchase shares in the company’s initial public offering. During a stock market premiere, companies typically give up all their stock to institutional investors.
Advance Publications, which owns Condé Nast, is Reddit’s largest shareholder, Reddit’s filing shows. The No. 2 shareholder is Chinese tech company Tencent. According to the filing, Sam Altman is the third-largest shareholder.
The start of the site was in 2005, when it was founded by Ohanian and his dorm mate at the University of Virginia. Over the past decade, it has grown with 76 million registered users who visit the site daily in more than 100,000 communities.
Both Ohanian, who has been a board member for years, and Huffman, who has been the CEO since 2015, decided in 2020 to split over what to do with some of the vile content on the site. Since, they have spoken little. In the new document, there was no mention of Ohanian or the company that has been around for 19 years in a new light.
Neither Ohanian nor Reddit immediately responded to requests for comment. Ohanian wrote on Thursday that he was pretty wild to see $RDDT go public after all these years. Founders, keep going.”
