The planned IPO is also a test for Reddit users to show their loyalty to the platform.
Reddit, a famous social media platform, is preparing for an initial public offering (IPO) in March to enter the stock market after three years of consideration. The company has secretly filed for an IPO in December 2021, hoping to go public in February 2024, according to a report from Reuters on Thursday citing people familiar with the matter.
Reddit plans to sell 10% of its shares to investors
The IPO process is expected to begin with a roadshow in early March and conclude with the actual IPO completion in the same month.
The San Francisco-based company plans to offer approximately 10% of its shares during the IPO, with a specific valuation to be determined closer to the listing date. In 2021, the social media platform was valued at around $10 billion through a financing round led by Fidelity Management with participation from other venture capital firms.
Last year, the company announced plans to generate more than $800 million in advertising revenue, indicating it expects its valuation to potentially rise during the IPO.
Reddit’s listing is expected to make it the first major social media company to debut on the stock market since the launch of Pinterest in 2019. The move will bring the social media platform into direct competition with Pinterest.
Both platforms, which originated in the United States, share the common goal of generating revenue by exploring the highly competitive arena of online interaction and content sharing.
Reuters said that despite the company’s careful planning, its IPO schedule may be delayed for undisclosed reasons.
loyalty test
The planned IPO is also a test for Reddit users to show their loyalty to the platform. Investors participating on social media platforms have contributed significantly to past “meme” stock surges for some major companies, including GameStop and AMC Entertainment Holdings, according to Reuters.
Inside sources believe these unique features will add an element of unpredictability to Reddit’s upcoming market debut, setting it apart from its predecessor, Pinterest.
In the broader context of social media stocks, the industry has seen a rebound, with a rally in technology stocks contributing to significant gains.
Facebook’s parent company, Meta Platforms, has seen its stock price triple in the past 12 months, while Snap is up 60% over the same period. Reddit was founded in 2005 by Steve Huffman and Alexis Ohanian. The company has since gained popularity among users for its niche discussion groups and user-driven content curation.
The social media platform faced backlash when it announced it would charge companies for access to its application programming interface (API), impacting users who rely on third-party apps to access Reddit.
In June 2023, the company’s CEO said the company, which offers premium access to its platform for a monthly subscription fee of $5.99, had yet to make a profit in over a decade.
Historically, the company has linked its financial struggles to its investments in the platform and the level of user interaction with ads on the site compared to other social media platforms.
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