Reddit files for initial public offering, favouring frequent users

The Reddit logo.
The Reddit logo. Copyright Matt Slocum/AP.
By Eleanor Butler
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The San Francisco-based firm is set to make its stock market debut in March, the first social media IPO since Pinterest went public in 2019.

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Reddit confirmed rumours on Thursday by filing with the US Securities and Exchange Commission in preparation for its IPO launch.

The company will offer formerly private shares on the New York Stock Exchange, listed under the ticker symbol RDDT.

Prices and the number of shares up for grabs have not yet been determined, but Reddit has announced a surprising quirk that will favour active users of its platform.

Although IPOs are usually only available to institutional investors, Thursday’s filing shows that Reddit moderators and regular users will be given the opportunity to buy stock. 

"Our users have a deep sense of ownership over the communities they create on Reddit," said the firm.

"We want this sense of ownership to be reflected in real ownership - for our users to be our owners. Becoming a public company makes this possible. With this in mind, we are excited to invite the users and moderators who have contributed to Reddit to buy shares in our IPO, alongside our investors."

Although the move could reward loyal users of the platform, Reddit has acknowledged that their participation could increase market price volatility.

Many institutional IPO investors agree that they will not sell their shares immediately after trading starts, yet ordinary Reddit users will not be subject to this rule.

Reddit’s performance

The IPO filing also revealed an insight into the performance of the social media platform.

Reddit recorded $804 million in annual sales last year, a 20% increase on the $666.7 million seen in 2022.

The social platform's main source of revenue is its advertising, although it faces fierce competition from sites such as Facebook and TikTok.

In 2023, Reddit sustained $90.8m of losses, down from $158.6m in 2022.

In terms of usage, the platform said it has 267.5 million active weekly users, more than 100,000 active communities, and a total of 1 billion posts.

Thursday’s filing also disclosed that the company’s main shareholders: Advance Magazine Publishers has the largest stake in Reddit, followed by the Chinese multinational Tencent, and OpenAI CEO Sam Altman.

The upcoming IPO launch will test the willingness of Reddit’s users to back the firm on the stock market despite the losses it has incurred since its creation in 2005.

In the future, the platform hopes it can boost profitability by using artificial intelligence to improve its advertising.

As well as filing its IPO on Thursday, the site also struck a deal with Google that allows the search giant to use Reddit posts for training its AI models.

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The deal will also give Reddit access to Google's artificial intelligence models for improving its internal site search and other features.

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