Social media platform Reddit, home of the AMAs, Wall Street Bets and thousands of other online communities, publicly filed its registration statement for an IPO on Thursday, detailing plans to push further into advertising, data sales and analytics, and what he called his nascent user-driven economy.
The company, founded in 2005, plans to list on the New York Stock Exchange under the symbol “RDDT.” The filing did not disclose the number of shares to be offered or their potential price. Morgan Stanley, Goldman Sachs, JPMorgan and BofA Securities are the leading book-running managers.
Reddit has initially confidentially filed a draft registration statement for a proposed public offering in 2021.
Reddit also said it will offer some of these shares in the IPO to its users and moderators, depending on their reputation and contribution to the platform. These participants must be over the age of 18, live in the United States, and have an account by January 1st.
“We want this sense of ownership to be reflected in actual ownership — for our users to be our owners,” co-founder and CEO Steve Huffman said in Reddit’s IPO presentation. “Becoming a public company makes all this possible. With this in mind, we are excited to invite Reddit contributors and moderators to purchase shares in our IPO, alongside our investors.”
The company’s public debut would come amid potential signs of life in the IPO market this year, and as Reddit tries to compete with much larger rivals like Meta Platforms Inc. META,
and TikTok. Some digital media, meanwhile, are waiting for a bigger recovery in the digital advertising market.
Reddit, in its IPO prospectus, also warned that user engagement can ebb and flow based on major cultural events, such as the pandemic or Russia’s invasion of Ukraine. And it cited the prospect of rivals copying its same features as a potential risk.
The company grew sales to $804 million last year, up 20.5% year over year. However, it is losing money. Last year it posted a net loss of $90.8 million.
However, the company said it attracted more than 500 million visitors in December. In the quarter ended Dec. 31, Reddit said it had an average of 73.1 million daily active unique users, or someone who comes by at least once in a 24-hour period. And in the prospectus, Reddit tried to present itself as a huge repository of human experiences and interactions.
“Whatever people are doing or going through, it’s on Reddit,” Huffman said in the doc.
He said Reddit is developing more ways for users to earn money on the platform. The document highlighted moves to allow users to earn money by creating avatars, offering photo editing services, selling watches and commissioning artwork. And it said it plans to offer more tools for developers and increase how users can “recognize contributors with real money to incentivize and reward the creation of quality content.”
Reddit said it would need to cut avatar creators’ earnings and that developing the user economy would “allow us to grow new revenue streams beyond advertising.”
Similar efforts have not always worked. When Hasbro Inc. HAS,
The Wizards of the Coast segment, which oversees the “Dungeons & Dragons” role-playing game, proposed a royalty payment to higher-earning game developers whose work used D&D’s infrastructure, efforts that failed last year following protests from the creators.
Reddit also wants to find ways to make the ads that appear on its site more prominent, more AI-driven, and more accurate. It said it plans to serve more video ads and ads in new places, such as comment threads and search pages, alongside existing ads in the home feed.
Reddit also said it is “in the early stages of allowing third parties to license access to search, analyze, and view historical and real-time data from our platform.” Customers, he said, could pay for real-time data feeds of anonymous public discussions on Reddit. The paper also claims that Reddit content could be used to power artificial intelligence and large language models.
“Reddit is one of the Internet’s largest corpuses of authentic, constantly updated human experiences,” the document reads. “In an increasingly data-driven world, we recognize that this information is increasingly important for a multitude of different uses and applications.”
“We believe that the Internet should work for consumers and that they should be able to find the information they need or the experiences they want,” the document continues. “Additionally, organizations need to prioritize sources of real-time human perspectives – from a company looking for feedback on a new consumer product to investors looking to capture market sentiments or signals – and Reddit provides a differentiated solution” .
Separately, Reddit announced a deal that will allow Alphabet’s GOOGL,
GOOG,
Google will use Reddit posts to train its AI models and improve Google Search. The deal, worth about $60 million, “will make it easier to discover and access the communities and conversations people seek out on Reddit,” the company said.