Reddit files to list IPO on NYSE under the ticker RDDT

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Chukrut
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Social
media
company
Reddit

filed
its
IPO
prospectus
with
the
Securities
and
Exchange
Commission
on
Thursday
after
a
yearslong
run-up.
The
company
plans
to
trade
on
the
New
York
Stock
Exchange
under
the
ticker
symbol
“RDDT.”

Its
market
debut,
expected
in
March,
will
be
the
first
major
tech
initial
public
offering
of
the
year.
It’s
the
first
social
media
IPO
since

Pinterest

went
public
in
2019.

Reddit
said
it
had
$804
million
in
annual
sales
for
2023,
up
20%
from
the
$666.7
million
it
brought
in
the
previous
year,
according
to
the
filing.
The
social
networking
company’s
core
business
is
reliant
on
online
advertising
sales
stemming
from
its
website
and
mobile
app.

The
company,
founded
in
2005
by
technology
entrepreneurs
Alexis
Ohanian
and
Steve
Huffman,
said
it
has
incurred
net
losses
since
its
inception.
It
reported
a
net
loss
of
$90.8
million
for
the
year
ended
Dec.
31,
2023,
compared
with
a
net
loss
of
$158.6
million
the
year
prior.

Reddit
is
one
of
the
most-visited
websites
in
the
U.S.,
according
to
analytics
firm
Semrush,
but
it
has
struggled
to
build
an
online
advertising
business
comparable
to
those
of
tech
giants
such
as
Facebook
parent

Meta
and
Google
parent

Alphabet.

Reddit
has
more
than
100,000
communities,
73
million
average
daily
active
uniques,
or
DAUq,
and
267
million
average
weekly
active
uniques,
according
to
the
filing.
As
of
the
fourth
quarter
of
2023,
Reddit’s
U.S.
average
revenue
per
user,
or
ARPU,
was
$5.51,
down
from
$5.92
from
the
previous
year.
The
company’s
global
ARPU
was
$3.42,
which
was
a
2%
year-over-year
decline
from
$3.49.

Reddit
said
that
by
2027
it
estimates
the
“total
addressable
market
globally
from
advertising,
excluding
China
and
Russia,
to
be
$1.4
trillion.”
Reddit
said
the
current
addressable
advertising
market
is
$1.0
trillion,
sans
China
and
Russia.

The
company
is
building
on
its
search
capabilities
and
plans
to
“more
fully
address
the
$750 billion
opportunity
in
search
advertising
that
S&P
Global
Market
Intelligence
estimates
the
market
to
be
in
2027.”

Reddit
said
it
plans
to
use
artificial
intelligence
to
improve
its
ad
business
and
that
it
expects
to
open
new
revenue
channels
by
offering
tools
and
incentives
to
“drive
continued
creation,
improvements,
and
commerce.”

It’s
also
in
the
early
stages
of
developing
and
monetizing
a
data-licensing
business
in
which
third
parties
would
be
allowed
to
access
and
search
data
on
its
platform.

For
example,
Google on Thursday
announced
an
expanded
partnership
with
Reddit
that
will
give
the
search
giant
access
to
the
company’s
data
to,
among
other
uses,
train
its
AI
models.

In
June,
several
prominent
Reddit

moderators
locked
subreddits
as
part
of
a
blackout
to
protest
the
company’s
decision
to
increase
the
price
some
third-party
developers
pay
to
use
its
application
programming
interface,
or
API,
depending
on
their
usage.
At
the
time,
Reddit
said
the
pricing
change
was
necessary
because
many
big
tech
companies
were
using
data
to
train
large
language
models.

“In
January
2024,
we
entered
into
certain
data
licensing
arrangements
with
an
aggregate
contract
value
of
$203.0
million
and
terms
ranging
from
two
to
three
years,”
Reddit
said,
regarding
its
data-licensing
business.
“We
expect
a
minimum
of
$66.4
million
of
revenue
to
be
recognized
during
the
year
ending
December
31,
2024
and
the
remaining
thereafter.”

Reddit
appears
to
be
investigating
a
business
strategy
akin
to
that
of

Roblox,
which derives the
bulk
of
its
revenue
from
digital
sales
on
its
social
gaming
platform,
and
online
retailer
eBay.
The
company
wants
to
introduce
more
features
to
create
a
user
economy
that
could
include
games,
according
to
the
filing.
Reddit
said
there
are
currently
informal
exchanges
of
physical
and
digital
goods
and
services
that
may
create
another
line
of
revenue.

Reddit
will
offer
three
classes
of
stock
with
different
voting
shares.
Class
A
stock
will
come
with
one
vote
per
share.
Class
B
shares
will
come
with
10
votes
per
share
and
can
be
converted
at
any
time
into
one
share
of
Class
A
stock.
Class
C
shares
have
no
voting
rights.

Reddit
said
that
its
non-employed
moderators,
known
as
Redditors,
can
participate
in
the
company’s
IPO
offering
through
its
“directed
share
program.”
Because
of
this,
Reddit
said
there’s
a
possibility
of
“individual
investors,
retail
or
otherwise
constituting
a
larger
proportion
of
the
investors
participating
in
this
offering
than
is
typical
for
an
initial
public
offering.”
Reddit
said
it
had
an
average
of
more
than
60,000
daily
active
moderators
in
December
2023.

“These
factors
could
cause
volatility
in
the
market
price
of
our
Class
A
common
stock,”
the
company
warned.

Regarding
risks,
Reddit
said
its
daily
active
unique
figures
“may
fluctuate
or
decrease
in
one
or
more
markets
from
time
to
time
due
to
various
factors.”

“For
example,
although
we
saw
increased
growth
in
our
user
base
during
the
COVID-19
pandemic,
we
experienced
lower
levels
of
DAUq
growth
and
declining
DAUq
as
the
effects
of
the
COVID-19
pandemic
subsided,”
the
filing
said.
“DAUq
has
also
declined
in
the
past
in
periods
following
usage
peaks
surrounding
certain
worldwide
events,
such
as
the
onset
of
the
conflict
between
Russia
and
Ukraine
in
the
three
months
ended
March
31,
2022,
and
cultural
trends,
including
video
game
releases,
such
as
Elden
Ring
in
the
three
months
ended
March
31,
2022,
and
traffic
related
to
r/wallstreetbets
in
the
three
months
ended
March
31,
2021.”

Reddit
first

filed
a
confidential
draft
of
its
public
offering
prospectus
with
the
Securities
and
Exchange
Commission
in
December
2021.
The
company
has
an
employee
headcount
of
2,013
as
of
December 31,
2023,
which
was
up
from
1,942
during
the
previous
year.

Reddit
has
raised
about
$1.3
billion
in
funding
and
has
a
post
valuation
of
$10
billion,
according
to
deal-tracking
service
PitchBook.
Publishing
giant
Condé
Nast
bought
Reddit
in
2006.
Reddit
spun
out
of
Conde
Nast’s
parent
company,
Advance
Magazine
Publishers,
in
2011.