Social media giant Reddit is set to launch its Initial Public Offering in March after more than three years of contemplation.
This would be the first IPO of a major social media company since Pinterest’s debut in 2019, and it comes amidst stiff competition for advertising dollars from platforms like TikTok and Facebook.
The IPO will test the willingness of Reddit users to support the company’s stock market debut, considering the platform’s history of fueling meme stock rallies, such as those of GameStop and AMC Entertainment Holdings.
Reddit filed confidentially for its IPO in December 2021 and is planning to make its public filing in late February.
The San Francisco-based company, valued at about $10 billion in 2021, aims to sell approximately 10% of its shares in the IPO, with the final valuation to be decided closer to the listing.
Founded in 2005, Reddit is best known for its niche discussion groups and the voting system where users can “upvote” or “downvote” content.
Despite generating revenue primarily through advertising and offering premium access, Reddit has yet to turn a profit, with losses attributed to a lack of user engagement with advertising compared to other social media platforms.
Market volatility and the pursuit of profitability have led Reddit to delay its IPO plans in the past.
The company is expected to generate over $800 million in advertising revenue in 2023, reflecting a growth of more than 20% from the previous year.
The IPO move aligns with the broader trend of rebounding social media stocks driven by a rally in technology stocks over the past year.