- Reddit is preparing to go public on the New York Stock Exchange.
- It plans to offer some shares to its most loyal users ahead of the IPO.
- Reddit is 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, expected next month, would 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 its early contemporaries, including Facebook, Twitter, and Snap, all did so between 2012 and 2017. That means some are wondering why Reddit has waited until now to make its move, but AI might have something to do with it.
On Thursday, the company filed its S-1 form with the Securities and Exchange Commission. The document laid out the financial details of the almost 20-year-old platform which included some surprises — such as OpenAI CEO Sam Altman being the company’s third-largest shareholder with a 8.7% stake.
Reddit’s chief executive and cofounder, Steve Huffman, has been planning an IPO for some time. The filing also showed that Huffman was paid $286 million in 2023 including stock and options.
Reddit’s revenues rose roughly 21% last year to $804 million as its losses reduced from $158.6 million in 2022 to $90.8 million in 2023.
Reddit also listed data licensing and AI training as part of its income streams.
“We believe our growing platform data will be a key element in the training of leading large language models (“LLMs”) and serve as an additional monetization channel for Reddit,” the company said in the document.
On Wednesday, the platform inked a $60 million-a-year deal with Google to license its content for AI training.
The company has not had a smooth path to the IPO — it has faced controversy over content moderation, hate speech, and a recent stand-off with moderators.
Community ownership
Created in a University of Virginia dorm room in 2005, Reddit has an unusual structure. Unlike other social media sites, Reddit is partly governed by its users and is largely anonymous.
Volunteer moderators control powerful subreddits — something that became a headache for the company last summer when powerful moderators staged a revolt. Protests over changes to the Reddit API caused more than 7,000 subreddit forums to “go dark” and stage a blackout.
The company eventually put pressure on the subreddits to reopen, temporarily removing some moderators.
Huffman claimed the decision was about reinforcing 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 going public will provide meaningful benefits to our community as well. Our users have a deep sense of ownership over the communities they create on Reddit.”
Huffman added that Reddit wanted “this sense of ownership to be reflected in real ownership — for our users to be our owners” and that “becoming a public company makes this possible. I have never been more excited about Reddit’s future than I am right now.”
Reddit is making a portion of its shares available to some of its most loyal users — an unusual approach that analysts say could lead to mixed results, Fortune reported.
Redditors have an interesting history with the stock market.
Chatter on the platform led to huge swings in stock prices for GameStop, AMC, and other companies in 2021 with the “meme stock” phenomenon. Even the suggestion of letting Redditors hold a significant slice of the company was deemed enough of a volatility risk that the company had to mention it in their IPO filings.
Reddit flagged that a similar phenomenon to Reddit-induced GameStop mania could happen around its own IPO.
On the legendary r/WallStreetBets and r/stocks subreddits, however, it appears few users are interested in taking up the offer. The response to the company’s offer was cool, Business Insider’s Katie Notopoulos reported, with one Redditor asking: “Can we pre-register to short?”
Representatives for Reddit declined to comment further.
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