Reddit files for IPO, eyes NYSE listing under 'RDDT' ticker
Reddit, the popular social media platform, is gearing up for its initial public offering (IPO) on the New York Stock Exchange under the ticker "RDDT." The highly anticipated public debut, set for March, marks the first IPO of a social media company since Pinterest's listing in 2019. In an unusual move, Reddit will allow 75,000 of its most loyal users to buy stocks in the IPO.
Financial performance and user statistics
In 2023, Reddit saw a 20% increase in annual sales, reaching $804 million. Despite this growth, the company has experienced losses since its inception, with a net loss of $90.8 million in 2023 compared to $158.6 million in 2022. Boasting over 100,000 communities and millions of daily and weekly active users, Reddit's average revenue per user (ARPU) experienced a slight decline in 2023. It was recorded as $5.51 as compared to $5.92 in 2022.
Addressing the global advertising market
Looking ahead, Reddit aims to tap into the global advertising market, which is projected to reach $1.4 trillion by 2027, excluding China and Russia. The company plans to leverage artificial intelligence to enhance its ad business and explore new revenue streams by offering tools and incentives to encourage content creation and commerce.
Reddit's data-licensing businesses and partnerships
Reddit is also exploring opportunities in data licensing, allowing third parties to access and search for data on its platform. The company has signed a $60 million deal with Google, allowing the search giant to utilize Reddit's content for training its AI models. In January 2024, Reddit secured data licensing deals worth $203 million. "We expect a minimum of $66.4 million of revenue to be recognized during the year ending December 31, 2024 and the remaining thereafter," Reddit said.
Reddit IPO will feature three classes of stock
Reddit's IPO will feature three classes of stock with varying voting rights: Class A with one vote per share, Class B with 10 votes per share (convertible to Class A), and Class C with no voting rights. Notably, non-employed moderators, or Redditors, can participate in the IPO through a "directed share program," which may result in a larger proportion of individual investors than typically seen in IPOs, potentially causing volatility in Reddit's Class A common stock price.
OpenAI CEO Sam Altman owns big chunk of Reddit
Sam Altman, the CEO of OpenAI, owns 8.7% stake in Reddit, which is greater than the proportion of stocks owned by Reddit CEO Steve Huffman. The Reddit CEO owns 3.3% of the company. Altman has been involved with Reddit from around 2005. He left the board in 2022 after OpenAI gained popularity and Reddit was vying for an IPO.