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- The “front page of the internet” is finally ready to go public.
- Reddit is set to list on the New York Stock Exchange on Thursday.
Reddit might have been self-anointed the “front page of the internet” almost two decades ago, but its time to face the public has just arrived.
The social media forum is set to list on the New York Stock Exchange on Thursday, March 21 — marking a milestone moment for the company created in 2005 by a pair of college roommates from the University of Virginia.
Back then, cofounders Steve Huffman and Alexis Ohanian, who’d go by the names “spez” and “kn0thing” online, worked under the stewardship of veteran Silicon Valley investor Paul Graham to build a social platform just as Mark Zuckerberg was taking Facebook mainstream.
After bringing Aaron Swartz on board — the late computer programmer then known as a developer behind RSS feeds — the company was ready to capture the attention of people using news aggregation services like Digg by offering their own take.
The launch of subreddits in 2008 made for a turning point as communities grew around interest-based groups on the site. However, the freedom given to anonymous users to roam without oversight has left it to contend with a reputation of being social media’s underbelly,
While it grew through a sale to media giant Condé Nast in 2006, before being spun out to its parent company, Advance Publications, Reddit has also struggled to find a path to profitability.
Though it has taken its time, Reddit finally seems ready to prove its doubters wrong.
Reddit prepares to go public
Reddit is targeting a top valuation of $6.4 billion in its initial public offering on Thursday in what’s set to be one of the largest public listings in recent memory as it prepares to test investor appetite.
There’s a lot of uncertainty in the run-up to the day.
Despite being created at a similar time to rivals like Facebook and X, Reddit’s platform has an average of 73.1 million daily active users, a far cry from the roughly two billion and 245 million daily users those two services have respectively.
Meanwhile, the IPO market more broadly has suffered a drought in recent years as uncertain market conditions have threatened to chop down ambitious valuation targets. Investors must weigh Reddit’s current health to determine if its target valuation is valid.
In its IPO filing made public last month, Reddit revealed that revenue had grown by around 21% last year, while its net loss at the end of 2023 was $90.8 million, down from a net loss of $158.6 million the previous year.
Those losses haven’t dissuaded investors just yet it seems. Reddit’s IPO is between four and five times oversubscribed, Reuters reported on Sunday citing sources familiar with the matter.
Still, as my colleague Peter Kafka notes, that’s still a lot of money for Reddit to burn. In part, it’s been spending heavily on engineering talent: about $439 million, or 55% of revenue, went on research and development, which includes engineer salaries.
No doubt, part of the bet investors will be making is that the R&D spend is focused on the technology of the moment: artificial intelligence.
In its S-1 filing with the SEC, Reddit positioned itself as an indispensable component of the generative AI boom. It described its content as a “foundational part of how many of the leading large language models (“LLMs”) have been trained.”
According to a Reuters report last month, Reddit has sought to monetize that content by striking a licensing deal with Google to make its data available to the search giant’s AI models for $60 million a year.
That could boost those with a stake in the IPO, like OpenAI CEO Sam Altman, whose holding of Reddit shares could be worth $51.4 million and $56.4 million.
Reddit will list 22 million shares, priced at $31 to $34, with loyal Redditors getting a chance to purchase shares in addition to the usual crowd of institutional investors.
The internet’s front page is about to become much more visible.
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