Reddit, internet message board turned collaborative institution, is now eying its own initial public offering (IPO). On Wednesday, Reddit announced that it had confidentially submitted a draft registration of a proposed common stock offering. There are few details currently available about the possible IPO. However, the rumor alone has investors and Redditors alike buzzing with anticipation.
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A Reddit IPO is inarguably a jarring idea. After all, where exactly would Reddit Inc get its revenue from?
In September, Reuters reported on a private fundraising round in which Reddit was valued at $10 billion dollars. This time around, Reddit is allegedly targeting a $15 billion valuation. Considering some other high-octane IPOs of late, that seems achievable to many of Reddit’s biggest investors.
Reddit grew substantially this year after one forum, r/WallStreetBets, practically orchestrated a market malfunction on the site. Essentially, the “apes” at WSB concocted a scheme to pinch many of the investment firms shorting what they believed were undervalued stocks. Gamestop (NYSE:GME), AMC (NYSE:AMC) and other “meme stocks” hit unbelievable spikes as a result. Meanwhile, some hedge funds ended up bleeding money.
So, with its now illustrious history in finance, how far can a Reddit IPO take the discussion forum website?
6 Things to Know for the Pending Reddit IPO
- Reddit’s growing advertising revenue is likely the biggest justification for a public offering. In the second quarter, it reported pulling in roughly $100 million in advertising money, triple the number from the same time last year.
- In August, Reddit stated it was seeking to explore the audio and video fields, where ad revenue is far greater.
- Some of Reddit’s biggest investors are Fidelity Investments, Sequoia Capital and Tencent Holdings (OTCMKTS:TCEHY).
- Reddit was first founded in 2005, but has largely fallen behind quick-starts Twitter (NYSE:TWTR) and Meta Platforms (NASDAQ:FB) (formerly Facebook).
- This year, Reddit hired its first chief financial officer. The new CFO is Drew Vollero, formerly of Snap (NYSE:SNAP).
- Reddit joins a packed field of IPOs this year, with 785 companies going public in the first nine months of 2021. It remains interesting to speculate whether Reddit will opt for a traditional IPO or merge with a special purpose acquisition company (SPAC) as a quick and easy market …….