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- Reddit is preparing to list on the New York Stock Exchange.
- Prior to the IPO, the company plans to offer some shares to its most loyal users.
- Reddit was one of the last traditional social media companies to go public.
Reddit is set to debut on the New York Stock Exchange under the ticker symbol RDDT.
The platform’s listing, scheduled for next month, will be the largest IPO by a social media company since Pinterest in 2019.
Reddit is one of the last traditional social media companies to list on the stock market, given that early social media companies such as Facebook, Twitter, and Snap all went public between 2012 and 2017. That means some are wondering why Reddit waited until now to list on the stock market. As for that movement, AI may have something to do with it.
On Thursday, the company filed its report. S-1 form and the Securities and Exchange Commission. The document provides financial details for the nearly 20-year-old platform, including that OpenAI CEO Sam Altman is the third-largest shareholder with an 8.7% stake in the company. There were also some surprises included.
Reddit CEO and co-founder Steve Huffman has been planning an IPO for some time. The filing also shows Huffman was paid $286 million in 2023, including stock and options.
Last year, Reddit’s revenue rose about 21% to $804 million, and its losses fell from $158.6 million in 2022 to $90.8 million in 2023.
Reddit also cites data licensing and AI training as some of its revenue sources.
“We believe our growing platform data will become a key element in training leading large-scale language models (“LLMs”) and serve as an additional monetization channel for Reddit,” the company said in a written statement. .
On Wednesday, the platform signed a $60 million annual deal with Google. License content for AI training.
The company’s path to IPO was not smooth. It has faced controversy over content moderation, hate speech, and recent conflicts with moderators.
Community ownership
Created in a dorm room at the University of Virginia in 2005, Reddit has an unusual structure. Unlike other social media sites, Reddit is partially controlled by its users, who are mostly anonymous.
Volunteer moderators manage the subreddit, but a revolt by powerful moderators last summer caused headaches for the company. Protests over Reddit API changes caused more than 7,000 subreddit forums to go “black” and cause a power outage.
The company ultimately pressured the subreddit to reopen and temporarily removed some moderators.
Huffman argued that the decision was meant to strengthen the sense of community on the platform.
“We are going public to advance our mission and become a stronger company,” he said in a founder’s letter included in the prospectus. “We hope that publishing will also bring meaningful benefits to our community. Our users have a deep sense of ownership in the communities they create on Reddit.”
Huffman added that Reddit wants “to see this sense of ownership reflected in true ownership – that our users are the owners,” adding, “Being a public company allows us to do this. I’ve never been more excited about the future of Reddit.” . ”
Reddit is giving away a portion of its stock to some of its most loyal users, an unusual approach that analysts say could lead to mixed results, Fortune reported.
The Redditor has an interesting history with the stock market.
Chat on the platform caused wild swings in the stock prices of GameStop, AMC, and other companies in 2021 as a “meme stock” phenomenon. Even the proposal to have Redditors own a significant part of the company would be considered enough volatility risk for the company. had to mention It is stated in the IPO application.
Reddit reported a phenomenon similar to GameStop caused by Reddit mania This could happen before or after your company’s IPO.
But on the legendary r/WallStreetBets and r/stocks subreddits, very few users seem interested in participating in this offer. According to Business Insider’s Katie Notopoulos, the response to the company’s offer was great, with one Redditor asking, “Can I pre-register to short?”
Representatives for Reddit did not immediately respond to a request for comment from BI outside of normal business hours.
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