Reddit, the massively popular online discussion forum, is once again considering going public with an initial public offering (IPO) after years of speculation and stalled attempts, sources say. The historic debut of the social platform could come as early as March 2024.
The company is reportedly targeting a valuation of around $15 billion, and is looking to sell approximately 10% of its shares. This would make it one of the largest technology IPOs in recent years.
After previously confidentially filing for an IPO in December 2021, with plans to go public in early 2022, Reddit put its offering on hold due to the cratering IPO market. However, recent positive signs, such as the pending IPO of fashion e-commerce giant Shein and a more optimistic economic outlook, have renewed the possibility.
Investor confidence has rebounded as of late, on hints from the Federal Reserve that further interest rate hikes are finished for 2024 and beyond. This has fueled hopes of an IPO rebound, after 2022 record interest rate hikes yielded the worst market for new public companies in over a decade.
Strategic Moves to Court Investors
In recent months, Reddit has made several strategic moves aimed at boosting engagement and profitability that could make it more attractive to potential investors.
This includes stricter rate limits on third-party services accessing Reddit data through its API, while steering more users to Reddit’s official app. Although controversial, this may allow Reddit to gain more revenue exposure from serving ads directly to its fast-growing user base.
There has also been speculation that Reddit is looking to curb Google and Bing’s access to its data for AI training without compensation. While firmly denied for now, taking a stronger stance on data rights in the future would demonstrate Reddit’s increasingly powerful position.
Massive Untapped Money-Making Potential
As one of the most-visited websites globally with over 50 million daily users, Reddit offers tremendous upside revenue potential even beyond ads. Premium subscriptions, commerce initiatives, such as the recently launched Collectible Avatars, and creator monetization products suggest ample room for financial growth.
Although Reddit only generated around $800 million in estimated ad revenue in 2022, analysts predict up to $2 billion in total revenue possible by 2027. Profitability was a key prerequisite before Reddit would be ready to debut on the public market.
Long Road to the Public Markets
Given the ups and downs of going public, Reddit would signify a momentous tech IPO as one of the largest social platforms left, that is still privately owned.
Reddit has patiently waited on the sidelines while growth stocks have endured a brutal selloff over the past year. Delaying until conditions improved likely saved the company from the disappointing post-IPO performances of Instacart, Klaviyo, and other recent offerings.
Although already 16 years old, Reddit only aggressively began building out its money-making products in recent years. Selling just 10% of shares would allow Reddit to raise substantial capital while retaining control to execute on its strategic vision.
As the sources caution, Reddit’s unpredictable history suggests the timeline could still shift depending on prevailing market sentiment weeks from now. But after years of false starts, the stars could finally be aligning for the social media juggernaut.
Final Thoughts
After years of speculation, Reddit finally appears poised to go public in early 2024, due to renewed investor optimism and its own boosts to profitability. A successful $15 billion IPO would validate Reddit’s patience in waiting for ideal conditions. While the timeline could still change, given past delays, Reddit seems ready to take the plunge. If achieved, the offering would cap the social platform’s long road to the public markets and unlock future growth potential for this internet juggernaut.
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