Community-focused bulletin board site Reddit took a significant step toward going public Thursday, paving the way for it to become the first major social media company to list on the stock market in years, and marking a post-drought test for private companies. In an initial public offering.
In its offering prospectus, Reddit disclosed its financial performance in preparation for selling its shares to investors. The San Francisco-based company reported a more than 20% increase in revenue and 73 million daily users as losses narrowed last year.
The prospectus kicks off the stock market process, where the 19-year-old company plans to meet with potential investors and drum up interest in buying shares. Reddit could be listed on the New York Stock Exchange within weeks. The company was valued at more than $10 billion in private financing in 2021.
Reddit was the last of the older generation of social media companies to aim for the stock market, after Facebook in 2012, Twitter in 2013 and Snap in 2017. Since then, the social media industry has changed and faced increased scrutiny. About misinformation, hate speech, and other influences. Some companies have changed direction. Facebook was renamed Meta, and Twitter was acquired by Elon Musk, took the company private and renamed it X in 2022.
There are high expectations for Reddit's move as initial public offerings have come to a halt. Just 108 companies went public in the U.S. last year, representing about a quarter of the companies that went public in 2021, according to data compiled by Renaissance Capital. Last year's biggest technology products included chip design company Arm and his grocery delivery company Instacart.
“We are going public to advance our mission and become a stronger company,” Reddit CEO Steve Huffman said in a founder's letter included in the prospectus. “We hope that our initial public offering will also provide meaningful benefits to our community.”
Reddit said in its prospectus that its 2023 revenue would be $804 million, up about 21% from $666 million a year earlier.the company lost The prospectus says the company will have a loss of $90 million in 2023, compared to a loss of $158 million the previous year.
Reddit's path to the public market was long and arduous. Founded in 2005 by Huffman and Alexis Ohanian in a dorm room at the University of Virginia, the site brings together anonymous users to discuss everything from popular TV shows to guitars to makeup to power washing machines. It started as a destination.
Reddit is unique in that it focuses primarily on close-knit, mostly anonymous communities, each managed by volunteers who self-govern their forums, or “subreddits,” based on rules they create. It had been.
The company has raised hundreds of millions of dollars in funding over the years, including $250 million and more than $410 million in two funding rounds in 2021. Investors include Fidelity Investments, Andreessen Horowitz, Sequoia Capital, and Tencent Holdings.
Like other early social networking efforts, Reddit initially eschewed advertising and revenue. Instead, we focused on forms of revenue that can be derived from community ideas, such as user-generated e-commerce systems and perks that users can buy from each other. Those ideas are still alive today.
Reddit ultimately embraced topic-focused, community-based advertising. For example, brands like Laneige targeted their ads to a forum called Makeup Addiction. This forum is one of the most active subreddits where users discuss cosmetics and how to apply them.
The site has also built a new data licensing business based on its vast corpus of conversational data, which has become increasingly important amid the enthusiasm for artificial intelligence. AI models are trained on such chunks of data to become more powerful. On Thursday, Reddit announced a licensing agreement with Google, which has been using Reddit's data to train and build AI systems.
This site has had its fair share of challenges as well. In its early days, the company played a role in spreading misinformation during the 2013 Boston Marathon bombings, and hosted racist and misogynistic content on some of its smaller subreddits. It faced controversy after controversy over its rejection of moderate communities. Last year, Reddit faced a user revolt after changing some of its rules to restrict third-party developers from using the site's content without paying.