NEW YORK - Reddit filed for an initial public offering (IPO), confirming its revenue growth and helping to propel a still tenuous resurgence in United States listings.
The social media company, more than two years after first filing confidentially with the US Securities and Exchange Commission, submitted those plans publicly on Feb 22.
Reddit will not disclose proposed terms for the IPO, including its valuation in a listing, until a later filing. The company has been advised to consider a valuation of at least US$5 billion (S$6.7 billion) in an IPO and could begin marketing the shares as soon as March, Bloomberg News previously reported.
The company is a high-profile addition to the year’s roster of newly and soon-to-be public companies. Thirty-four firms have raised more than US$7.1 billion in IPOs on US exchanges since Jan 1, according to data compiled by Bloomberg. The biggest of those listings was the US$1.57 billion offering by Amer Sports in January.
Shares of those companies have gained more than 14 per cent on a weighted average basis. That contrasts with Arm Holdings and three other companies that went public in September and October and fell below their IPO prices, putting a quick end to an anticipated rebound in listings after a two-year slowdown.
Arm, whose US$5.23 billion offering was the biggest of the year, has since rocketed 152 per cent. Excluding Arm, though, the 166 companies that raised about US$21 billion in 2023 have gained an average of only 13 per cent, the data show.
Market test
Reddit could be 2024’s first major test of the market for a technology start-up backed by venture capital. The company, which has raised US$1.38 billion, was valued at US$10 billion after a 2021 financing round, according to data provider PitchBook.
Its listing will be watched closely by IPO candidates such as Microsoft-backed data security start-up Rubrik and healthcare payments company Waystar Technologies.
Reddit, founded in 2005, averaged 73.1 million daily active unique visitors in the fourth quarter, according to the filing. It became an icon of the so-called meme-stock era after a forum on the site, WallStreetBets, jolted the stock market.
The company had net loss of US$90.8 million on revenue of US$804 million in 2023, compared with a net loss of US$158.6 million on revenue of US$666.7 million a year earlier, according to the filing.
Reddit co-founder and chief executive Steven Huffman said in a signed letter included in the filing that Reddit has many opportunities to grow both the platform and the business.
Advertising & AI
“Advertising is our first business, and advertisers of all sizes have discovered that Reddit is a great place to find high-intent customers that they aren’t able to reach elsewhere,” Mr Huffman said. “Advertising on Reddit is rapidly evolving, and we are still in the early phases of growing this business.”
Reddit said it is in the early stages of allowing third parties to license access to data on the platform, including to train artificial intelligence models.
The company will set aside shares in the IPO to be bought by users and moderators who created accounts before Jan 1, according to the filing. The amount of stock to be allotted in the directed share program will be disclosed later.
Reddit’s largest shareholder is Advance Magazine Publishers, part of the Newhouse family publishing empire, with 34 per cent of the voting power before the offering, the filing shows.
Mr Huffman owns shares that give him 3.5 per cent of the voting power. They include Class B shares that will have 10 votes each, compared with one each for the Class A shares to be sold in the IPO, the filing shows. Mr Huffman also has a voting proxy agreement with Advance.
Other large shareholders include chief operating officer Jennifer Wong, as well as FMR and entities affiliated with OpenAI CEO Sam Altman, Tencent Holdings, Vy Capital and Quiet Capital and Tacit Capital, according to the filing.
The company plans for its shares to trade on the New York Stock Exchange under the symbol RDDT. BLOOMBERG
