Reddit IPO: Everything you need to know about Reddit
Rebecca Cattlin September 15, 2021 11:00 PM
Popular – but controversial – online discussion forum Reddit is rumoured to be going public within the next year. Find out everything we know about the Reddit IPO and company’s potential $15 billion valuation.
Reddit IPO: When will Reddit go public?
Reddit is expected to go public in Q4 2021 or early 2022, but sources claim the timing and size of the IPO will be subject to market conditions. The company is reported to be hiring investment bankers to prepare for an IPO on the New York Stock Exchange.
Reddit has yet to file its intent to go public with the Securities and Exchange Commission (SEC), so it’s currently all hearsay still.
This isn’t the first time Reddit has been rumoured to be planning an IPO. In fact, speculation has been mounting for about a year, but now that the firm has started hiring advisors, it would seem this is a more serious claim.
See other upcoming IPOs you can trade with us
What do Reddit users think about the Reddit IPO?
Reddit users on the forum r/WallStreetBets have already vocalised their concerns about the move to take the firm public. The main criticism seems to be that as a listed company, Reddit will need to start generating more income to please shareholders, which could result in users seeing more advertising and modifications to the experience.
How much is Reddit worth?
Reddit was valued at $10 billion in a private fundraising round in August 2021, but by the time of its IPO, the online message board company is aiming for a valuation of more than $15 billion.
How to trade Reddit
Once it lists, you can trade Reddit in the same way as any other share. In the meantime, choose from thousands of other global stocks with City Index.
- Open a City Index account, or log in if you’re already a customer
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Alternatively, if you’re not ready to trade live markets – but want to practise ahead of the Reddit listing – you can set up a free demo account to trade in a no-risk environment.
What does Reddit do?
Reddit is an online discussion board and community, founded in 2005 by Steve Huffman and late activist Aaron Swartz. Despite not being as popular as other social media firms such as Facebook, Instagram and Twitter, Reddit has made its name with niche – and often controversial – discussion groups.
Reddit has more than 100,000 communities, in which over 53 million active daily users share their thoughts and ideas on a range of topics. In fact, Reddit is currently the 19th-most-visited website on the internet, and the sixth-most-popular social networking site.
The site allows users to post anonymously, which is supposed to encourage honestly and transparency. Any post can be voted on by the community; posts with the largest number of up votes are viewed more and hold greater authority.
Most recently, Reddit has become a hub of retail investors, flocking to the board r/WallStreetBets to discuss tips and ideas on stock trading. The community – known as a subreddit – was responsible for the rise of GameStop and other so called ‘meme stocks’. Their intentions were to profit as hedge funds covered their short positions, in what’s known as a short squeeze.
Find out more about the Reddit stocks to watch
How does Reddit make money?
Reddit makes its money through advertising on its site. It reported that in Q2 2021, it made $100 million in ad revenue – three times the amount it made in Q2 2020.
For users who don’t want ads on their feeds, there is a ‘premium membership’ available, which grants an ad-free experience as well as full access to the r/lounge, 700 free monthly coins, and other benefits. The membership costs $5.99 per month or $49.99 per year.
Reddit also generates money through Reddit Coins, which are virtual goods that Reddit users can purchase in bundles and gift to other Reddit users to reward them for their contributions and good content. Coin bundles cost between $1.99 to $199.99.
Other benefits to users holding Reddit Coins include access to the r/lounge. Which is an exclusive subreddit group for Premium members only.
Reddit has also raised capital through eight rounds of fundraising, generating a total of $919 million from 27 different institutional investors.
Is Reddit profitable?
No, Reddit isn’t yet profitable. In 2020, Reddit reported $170 million in revenue.
What is Reddit's business strategy?
Reddit’s business strategy thus far is a pretty odd one, given that the firm sacrifices the opportunity to make money in order to keep its users happy. As we’ve seen, advertising space sales are the company’s primary revenue stream. However, Reddit does not require email addresses and does not track personal information, losing out on the opportunity to increase advertising through data exploitation, in order to keep its users anonymous.
And this is where one of the biggest challenges Reddit could face comes in: regulation. Due to the anonymity of users, there’s always the possibility of malpractice and manipulation, such as bots or even hedge funds driving users toward certain stocks. Reddit does already have moderators in place, but once it’s a public firm the level of scrutiny it’ll face will likely increase. Any thread to the anonymity of users could cause an exodus from the platform.
After half a decade neglecting its ad platform, Reddit has begun to invest heavily in this area before it goes public, so we may see the company reach profitability by 2022.
Reddit announced in 2020 that it was buying video creation app Dubsmash, entering into direct competition with TikTok.
The company also just hired its first ever chief financial officer, Drew Vollero (previous CFO for SNAP) in what many see as preparation for its IPO.
Who owns Reddit?
Reddit is owned by Condé Nast Publications, a global media company, who bought the company from founders Huffman and Ohanian one year after it was created for $10 to $20 million.
Current investors in Reddit also include Fidelity Investments, Andreessen Horowitz, Sequoia Capital and Tencent Holdings.
Board of directors of Reddit
Reddit’s board of directors includes:
- Paula Price
- Michael Seibel
- Porter Gale
- Sam Altman
- Bob Sauerberg
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.