Reddit files for IPO after two years on sidelines
Reddit Inc. filed for an initial public offering of stock, confirming its revenue growth and helping to propel a still tenuous resurgence in U.S. listings.
The San Francisco-based social media company, more than two years after first filing confidentially with the U.S. Securities and Exchange Commission, submitted those plans publicly Thursday.
Reddit won’t 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 $5 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 $7.1 billion combined in IPOs on U.S. exchanges since Jan. 1, according to data compiled by Bloomberg. The biggest of those listings was the $1.57-billion offering by Amer Sports Inc. in January.
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Shares of those companies have gained more than 14% 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 $5.23-billion offering was the biggest of the year, has since climbed 154%. Excluding Arm, the 166 companies that raised about $21 billion last year have gained an average of only 13%, the data show.
Reddit could be 2024’s first major test of the market for a technology startup backed by venture capital. The company, which has raised $1.38 billion, was valued at $10 billion after a 2021 financing round, according to data provider PitchBook.
Its listing will be watched closely by IPO candidates such as Microsoft Corp.-backed data security startup Rubrik Inc. and healthcare payments company Waystar Technologies Inc.
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.
“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,” Chief Executive Steven Huffman said in the filing. “Advertising on Reddit is rapidly evolving, and we are still in the early phases of growing this business.”
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 number of shares to be allotted to them will be disclosed later.
Reddit had a net loss of $90.8 million on revenue of $804 million in 2023, compared with a net loss of $158.6 million on revenue of $666.7 million a year earlier, according to the filing.
Its largest shareholder is Advance Magazine Publishers Inc., with 34% of the voting power before the offering, the filing shows.
The offering is being led by Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp. The company plans for its shares to trade on the New York Stock Exchange under the symbol RDDT.
