Reddit Files to Go Public, Will Let Top Users Buy IPO Shares

Reddit has officially filed on Thursday with the Securities and Exchange Commission to go public, aiming for a New York Stock Exchange listing under the ticker symbol RDDT.

This move positions Reddit as the first significant tech initial public offering (IPO) of the year and marks the first social media platform to go public since Pinterest in 2019.

Founded in 2005 by Alexis Ohanian and Steve Huffman, Reddit has evolved into one of the most frequented websites in the U.S., with over 100,000 communities. Despite its popularity, the company has faced challenges in scaling its online advertising revenue to match that of tech giants like Meta and Alphabet.

Reddit reported $804 million USD in revenue for 2023, a 20% increase from the previous year, yet it continues to operate at a loss, with a net loss of $90.8 million USD for the year ending December 31, 2023.

“We are going public to advance our mission and become a stronger company. We hope going public will provide meaningful benefits to our community as well. Our users have a deep sense of ownership over the communities they create on Reddit. This sense of ownership often extends to all of Reddit. We see this in our users’ passion for their communities, their desire for Reddit to be as amazing as possible, and in their disapproval when we let them down,” wrote Huffman in Reddit’s Form S-1 filing.

Reddit will also let some of its power users the chance to buy its IPO stock first, which is normally reserved for bigger investors. These include users and moderators who have “contributed to Reddit”.

“We want this sense of ownership to be reflected in real ownership—for our users to be our owners. Becoming a public company makes this possible. With this in mind, we are excited to invite the users and moderators who have contributed to Reddit to buy shares in our IPO, alongside our investors,” explained Huffman.

The social media giant, which has raised approximately $1.3 billion in funding and is valued at $10 billion, according to PitchBook (via CNBC), is exploring new revenue avenues. These include enhancing its search capabilities and leveraging artificial intelligence to boost its advertising business.

Additionally, Reddit is developing a data-licensing business, allowing third parties to access and search its platform data. A key partnership with Google was announced on Thursday, granting the search giant access to Reddit’s data to train its AI models at the price of $60 million USD.

Reddit’s IPO filing also hints at plans to foster a user economy, potentially introducing features that enable the exchange of goods and services, akin to platforms like Roblox and eBay. The company will offer three classes of stock, with varying voting rights, and has outlined a directed share program allowing its community moderators to participate in the IPO.

Back in January, it was reported that Reddit was going to launch its IPO in March, and that story has pretty much come true.