Reddit’s IPO Fever Is Rising High

Reddit’s IPO Fever Is Rising High
Reddit’s IPO Fever Is Rising High

The year 2005 saw the launch of Reddit, an online community and message board. Over 100,000 distinct neighborhoods/communities (Subreddits) make up Reddit's infrastructure; each has its own lingo, culture, customs, and set of rules—written and unwritten alike. In these communities, people build their own neighborhoods and also moderate it to make sure it stays secure, lively, and, most importantly, authentic to who it is.

At present, Reddit ranks as both the seventh most popular social networking platform and the sixteenth most viewed website in the world. The ability to publish anonymously is the site's main selling point since it promotes honesty and openness.

Being the first US-listed social media firm in the last five years (since Pinterest's launch in 2019), it's sure to be a widely watched initial public offering. After a long absence of tech IPOs, investors and entrepreneurs will be keeping a close eye on this one to see whether it will revive the market for initial public offerings.

According to sources close to the situation, Reddit's first public offering is four to five times oversubscribed, which increases the likelihood that the social media network will achieve its $6.5 billion valuation target.

Although the oversubscription does not ensure a successful stock market debut, it does indicate that the company is well-positioned to achieve its target price range of $31 to $34 per share when pricing the initial public offering.

Reddit CEO Steve Huffman on IPO debut: The best investors of Reddit are people who use Reddit

Turning the Cornerstone
A Flimsy Business Projection
Reddit Is Also Trying to Regulate AI to Help It Grow

Turning the Cornerstone

Reddit has been an integral part of the social media landscape since its 2005 inception. One of the most recognizable trademarks on the internet is its famous logo, which features an extraterrestrial against an orange backdrop.

"The sublime to the ridiculous, the trivial to the existential, the comic to the serious" are just some of the subjects that can be discussed on its 100,000 online forums, called "subreddits," according to co-founder Steve Huffman. According to Huffman's letter, he sought assistance from one of the subreddits in order to stop drinking. Similarly, in 2012, former US President Barack Obama conducted an interview with the site's users called an "AMA" ("ask me anything").

In 2021, members of the company's powerful communities gained notoriety for their involvement in the "meme-stock" scandal, in which a number of individual investors pooled their resources on Reddit's "wallstreetbets" forum to purchase shares of heavily shorted firms, including gaming retailer GameStop.

Worldwide Visits to From July to December 2023
Worldwide Visits to From July to December 2023

A Flimsy Business Projection

Contemporaries like X (formerly known as Twitter), Facebook (META.O) by Meta Platforms, and opens new tab have been more successful than Reddit, despite the cult-like status of its supporters.

In a previous filing, the firm claimed to be "in the early stages of monetizing (its) business" and to have never made a profit.

For the three months ending December 31, 2023, Reddit reported an average of 73.1 million daily active "uniques" (users who log in at least once per day).

Another issue that advertisers have pointed out is the company's lax approach to content management.

In order to keep the forums free of inappropriate material, it depends on volunteers from its user base. In 2023, a number of moderators resigned in protest of Reddit's intention to charge outside app developers for data access, but they are free to resign at any moment.

A Complete Guide for How to Make Money on Reddit
Reddit is one of the top-ranked social media apps in US with about 52 Million daily active users. Here’s a Complete Guide for How to Make Money on Reddit

Reddit Is Also Trying to Regulate AI to Help It Grow

Another way Reddit plans to make money off of its platform is by selling licencing its content rights to companies who use it to train AI models. Last month, a renowned media house reported that Google and Reddit had signed an agreement to use Reddit content to train Google's huge language models. The transaction is worth $60 million per year.

But even that income isn't without its doubters. Last Monday, Reddit announced that the FTC is investigating its licencing practices for user-generated content.

"Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area," a regulatory filing from Reddit stated. "We do not believe that we have engaged in any unfair or deceptive trade practice."

Even more so in the beginning, IPO stocks can be somewhat unpredictable. Redditors, the name given to both users and moderators on the platform, were allotted around 8% of the 15.3 million shares that were issued during the IPO. There will be no lockup period for those users; they can sell whenever they want, according to the Reddit post.


What is Reddit?

Reddit is an online platform enabling users to share links or text posts encompassing various content types, including images, videos, news articles, and discussion threads, fostering a vibrant community-driven experience.

Who are the founders of Reddit?

Reddit was founded by Steve Huffman and Alexis Ohanian, and Aaron Swartz in 2005.

When were subreddits created?

The feature of commenting on posts was introduced several months after Reddit's initial launch, while users gained the ability to create their own subreddits in 2008.

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