What Reddit going public means for the social media platform

Reddit has made its IPO filing public ahead of the social media company’s entrance to the U.S. stock market in March, as reported by Reuters.

An IPO, or initial public offering, means shares of a private company are made available to the public for the first time — and the company can then raise equity capital from public investors, according to Investopedia.

Typically a company will start to advertise its interest in going public when a company has reached a private valuation of approximately $1 billion, which is also known as unicorn status, Investopedia said.

Reddit was valued at $10 billion in a funding round in 2021, Reuters reported. It is unclear what valuation the company will aim for during its share sale in the coming weeks. It is expected to seek a sale of nearly 10% of its shares in the IPO, Reuters reported earlier, however.

The social media company’s IPO filing showed it had $90.8 million in losses and 21% revenue growth in 2023, according to Reuters. Specifically, Reddit had revenue growth of $804 million — up from $666.7 million a year earlier.

“The initial public offering (IPO) filing comes almost two decades after Reddit’s launch and will be a major test for the platform that still lags the commercial success of social media contemporaries such as Facebook and Twitter, now known as X,” Reuters said.

Other publicly traded social media companies include Meta, which operates Facebook, Pinterest and Snapchat. X, formerly known as Twitter, is not traded publicly.

As Reddit filed to go public, they revealed that CEO Steve Huffman made $193 million last year.

The moderators who run much of the site are volunteers making zero dollars.https://t.co/bvpnvmHXyR

— More Perfect Union (@MorePerfectUS) February 23, 2024

The platform said it had an average of 73.1 million daily active users and 267.5 million weekly active users in the three months ended Dec. 31, 2023, and there are 1 billion cumulative posts.

Web developer Steve Huffman and entrepreneur Alexis Ohanian, husband of tennis star Serena Williams, founded Reddit in 2005. Reuters reported Reddit previously filed for the U.S. IPO in late 2021, but “tough economic conditions and the poor performance of listed technology stocks compelled it to delay the offering.”

Reuters said Morgan Stanley and Goldman Sachs have been selected as the lead underwriters for the IPO, which includes more than a dozen other banks.

Reddit’s IPO will be the first major social media company since Pinterest in 2019.

But Reddit won’t be the only social media platform venturing into the public sphere, as Donald Trump’s media startup Truth Social merger deal won approval by the Securities and Exchange Commission recently, as reported by The Washington Post.

The Post reported that Trump will hold more than 78 million shares in the post-merger company, a filing shows — a stake that, at current prices, would be worth nearly $4 billion.