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After working overtime to remake itself ahead of a renewed pitch to investors, Reddit has filed its intentions to go public with the SEC. The company seeks a $6.5 billion valuation and hopes to raise $748 million on 22 million shares sold at $31 to $34 a pop. As an olive branch to users who haven’t been particularly happy with it, it’s giving them dibs on 1.76 million shares.
Reddit has tried to go public before. But its initial 2021 bid, which saw it possibly valued at $10 billion, fizzled in a then-unstable IPO market. The company then spent 2023 dismantling what CEO Steve Huffman appeared to see as the main obstacle to its ramp to financial success: easy access to Reddit’s data.
In June 2023, the site rolled out pricing changes to its API access that were ostensibly intended to pinch off easy AI data scraping but also created huge costs for developers of third-party apps like Apollo. This sparked a massive site-wide moderator and user protest that sent thousands of its biggest subreddits dark, some for months.
The site steamrolled its way through the protests, fired moderators, and later even threatened to block Google and Bing from indexing it. In February 2024, the company announced a reportedly $60 billion AI training deal that would give Google access to the site’s massive repository of user-generated data, putting the cherry on top of its aggressive 2023 maneuvering.
Marketers are about to infiltrate your favorite subreddits.
Ahead of its IPO, Reddit announced a set of tools for businesses that want to be more active on the platform — including the ability to see which subreddits are mentioning a brand. For businesses, Reddit says it’s a way to “establish and grow a meaningful organic presence on Reddit.” In other words: the brands are coming.
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Image: Reddit
Reddit will reportedly seek an up to $6.5 billion valuation when it goes public.
That’s according to The Wall Street Journal, which says Reddit could shoot for a price range between $31 to $34 per share when launching its IPO. The $6.5 billion number is significantly lower than the more than $10 billion Reddit was valued at in 2021 following a round of funding.
A lot of Redditors hate the Reddit IPO
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“Short the shit out of it.” The Verge
If you are a certain kind of cynical, Reddit’s S-1 filing sets off alarm bells. There’s the mention of r/WallStreetBets. (Five mentions in total, actually.) There’s the stockpile it’s amassed of Bitcoin and Ethereum. And there’s the program to give certain power users the option of buying stock before it debuts on the public market.
The S-1 is a document filed with the US Securities and Exchange Commission before a company goes public. It discloses all sorts of things: revenue figures, risk factors, key data about the business. And it sends certain signals. In this case: I see some meme stock shit.
Reddit’s biggest risk factor is Google
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Reddit CEO Steve Huffman. Credit: Illustration by William Joel / The Verge | Photo by Greg Doherty/Variety via Getty Images
Happy Friday. Aside from Google’s Gemini fiasco and Nvidia’s blowout earnings report, the big tech news this week was Reddit detailing plans for its long-awaited IPO. Below, I get into Reddit’s biggest risk factor, the company’s fascinating relationship with Sam Altman, and more…
The first thing I did upon opening Reddit’s IPO paperwork on Thursday was press Command + F on my keyboard and type “Google.”
Google is reportedly Reddit’s $60 million per year AI content licensing customer.
Charging for data access was a flash point for last year’s protests, with Reddit CEO Steve Huffman telling The Verge, “...data licensing is a new potential business for us.”
Now, with Reddit’s IPO launch close at hand, Reuters is putting a name on rumors of an AI company that’s paying Reddit for training data, in a deal that could be a model for similar arrangements, citing three sources who say the company is Google.
Matt Levine has some thoughts about Reddit offering its stock to Redditors.
There are rumors the Reddit IPO is happening soon. Some of the most active Redditors may get the opportunity to buy in at the IPO price. Is a new meme stock in the making? Maybe!
In the 2020s, some companies are owned in large part by retail investors, and some of those investors are more interested in being part of an online community of investors, and trading jokes and memes, than they are in financial analysis. And you can make those investors happy in less traditional ways, like by giving them popcorn or buying a gold mine or doing a YouTube interview with no pants on.
The Reddit IPO inches closer.
The company is now looking at March. It’s been moving toward a public offering since December 2021, shortly before the market started to dip.
Reddit may be looking to go public in 2024.
Bloomberg reports that Reddit is “holding talks with potential investors” about an IPO that could take place as early as the first quarter of next year.
The company filed a confidential S-1 with the SEC in late 2021 but hasn’t actually gone public yet. When I asked CEO Steve Huffman in June of this year about an IPO, he said that “it’s something we’d like to do someday.”