New York
CNN
—
Reddit, the message board website recognized for its chronically on-line userbase and for originating a lot web discourse, filed for its long-anticipated preliminary public providing on Thursday.
The transfer would make Reddit the primary main social media firm to go public since Snapchat in 2017. And the providing will include a twist that would enable a few of the most fervent of its greater than 70 million day by day customers to purchase shares within the IPO — a possibility sometimes reserved for institutional traders.
Reddit mentioned it should reserve shares for prime customers to purchase, based mostly on their so-called “karma,” a time period the platform makes use of to measure its customers’ contributions and repute on the positioning.
“Our customers have a deep sense of possession over the communities they create on Reddit. We wish this sense of possession to be mirrored in actual possession — for our customers to be our homeowners,” co-founder and CEO Steve Huffman mentioned in a letter in Thursday’s submitting. “Changing into a public firm makes this potential.”
Reddit’s submitting comes amid a slump in the broader IPO market, as Wall Avenue hopes {that a} blockbuster itemizing may assist revive dealmaking.
The San Francisco firm filed to record on the New York Inventory Trade beneath the ticker image “RDDT,” in line with a Securities and Trade Fee filing. The submitting comes almost three years after Reddit hired its first chief financial officer, and executives, together with co-founder and CEO Steve Huffman, started publicly discussing the potential for an IPO to additional elevate the corporate’s profile.
Now, Reddit — which isn’t but worthwhile — says it seeks to develop its enterprise via promoting, extra e-commerce choices and by licensing its knowledge to different firms to coach their synthetic intelligence fashions.
“Our work to make Reddit quicker, simpler to make use of, simpler to average and govern, and easier to navigate and discover related communities is driving development right now and can proceed to be our focus into the long run,” Huffman mentioned.
Reddit was sold to media firm Condé Nast in 2006 by its co-founders Alexis Ohanian, who left the corporate in 2020, and Huffman, who now owns 3.3% of the corporate. In response to the IPO submitting, the corporate’s largest shareholders are actually Advance Publications (30.1%), which owns Condé Nast, Chinese language tech firm Tencent (11%) and OpenAI CEO Sam Altman (8.7%).
Reddit, which has known as itself the “entrance web page of the web,” is a social media veteran: the corporate began in 2005, the yr that school roommates Huffman and Ohanian graduated from the College of Virginia. It was the identical yr that TheFacebook turned Fb, YouTube uploaded its first video and earlier than the launch of Twitter (now known as X).
In its 18 years as a web-based social hub, Reddit has seen huge development, occasional controversy and even market-shifting stunts.
The platform is thought for its “subreddits,” that are distinctive, user-generated dialogue boards the place customers type communities on varied subjects starting from sports activities to politics to faith and every part in between. Reddit customers usually submit anonymously in these boards, discussing every part from memes to main information occasions.
In 2021, Reddit precipitated mass market upheaval when a neighborhood of day merchants on the platform known as WallStreetBets started shopping for up shares of GameStop in an effort to harm hedge funds that guess in opposition to the inventory. Most of the Redditors who joined the frenzy late ended up with enormous losses.
Nonetheless, the incident helped draw attention to the ability of Reddit communities. Within the wake of the WallStreetBets debacle, Reddit announced a brand new, $250 million funding spherical that valued the corporate at $6 billion. It additionally introduced plans on the time to double its workforce and develop into worldwide markets.
Earlier this yr, Reddit was once more drawn into the highlight by a mass user protest that resulted in 1000’s of the platform’s hottest subreddits going darkish for weeks over a plan to cost some third-party apps hundreds of thousands of {dollars} in charges to proceed accessing the platform. The protest ultimately fizzled out after Reddit threatened to eject discussion board moderators in the event that they continued the blackout.
Thursday’s submitting provides essentially the most detailed look but on the state of Reddit’s enterprise, which seeks to develop past the standard ad-supported mannequin upon which most social platforms proceed to closely rely.
Reddit says it averaged greater than 73 million day by day lively customers within the closing three months of 2023, up from the 52 million day by day lively customers it reported in 2021. The corporate additionally mentioned in its submitting it hosted greater than 100,000 lively communities on the positioning in December 2023.
The corporate’s gross sales in 2023 reached $804 million, up 21% from $666.7 million in 2022. Reddit reported a web lack of $90.8 million in 2023, a narrower loss than the $158.6 million loss it netted in 2022.
And whereas Reddit mentioned it expects its complete addressable market in promoting to develop to $1.4 trillion by 2027, it additionally acknowledged within the submitting’s danger elements disclosure that it has “a historical past of web losses and we could not be capable of obtain or preserve profitability sooner or later.”
Reddit additionally mentioned it plans to develop income by promoting knowledge to AI corporations and by specializing in the “consumer economic system.” The submitting particulars a future plan to spice up e-commerce on the positioning and enhance consumer earnings via the Reddit Contributor Program and Reddit Collectible Avatars Creators Applications. These methods enable customers to earn financial items and rewards of which the corporate can take a portion, the submitting mentioned.
Reddit on Thursday additionally introduced an expanded partnership with Google that features entry to Reddit’s knowledge to coach Google’s AI fashions and higher show Reddit content material throughout Google platforms.