Reddit eyeing potential IPO in early 2024

Reddit has hired investment bankers and lawyers to prepare for a possible IPO
An undated image illustrating the Reddit logo. — Canva
An undated image illustrating the Reddit logo. — Canva 

Reddit, the popular online platform where users can create and join communities, share content, and vote on posts, is once again eyeing a potential initial public offering (IPO). 

According to Bloomberg, Reddit has hired investment bankers and lawyers to prepare for a possible IPO as soon as next year.

It is not known at what valuation will the San Francisco-based company would go public next year if it does go through with the offering.

It should be noted that in December 2021, the social media giant confidentially submitted a draft registration statement with the Securities and Exchange Commission to go public. However, those plans never materialised.

Later in January 2022, Reddit decided to work on the listing and tried to tap Morgan Stanley and Goldman Sachs. At the time, it was considering a valuation of as much as $15 billion. 

Why Reddit is attractive to investors?

The social media platform has a loyal and engaged user base that generates a lot of traffic and content. According to its own statistics, Reddit had over 52 million daily active users and 100,000 active communities in October 2020. It also ranks as the 18th most visited website in the world and the 7th most visited website in the US by Alexa.

Reddit has a unique and diverse business model that includes advertising, premium subscriptions, awards, and partnerships. Reddit’s revenue grew by 70% in 2019 to more than $100 million, and it is expected to grow even more in 2020 and beyond. Reddit also raised $250 million in a funding round earlier this year, valuing the company at $6 billion.

Challenges and risks for Reddit IPO

The organisation is struggling with a lot of challenges and risks; however, one of the main issues that Reddit faces is how to balance its commitment to free speech and community moderation with its responsibility to prevent harmful and illegal content. 

The social media website has faced criticism and controversy for hosting subreddits that promote hate speech, harassment, conspiracy theories, and misinformation. It has also been accused of censoring and manipulating content that goes against its political or commercial interests. Another challenge that the platform faces is how to compete with other social media platforms that have larger and more diverse audiences, such as Facebook, Twitter, Instagram, and TikTok. 

Reddit has been trying to improve its user experience and attract new users by redesigning its website and mobile app, launching new features such as live streaming and audio chat rooms, and expanding its presence in international markets. However, Reddit still lags behind its rivals in terms of user growth, engagement, and monetisation.

Prospects and opportunities for Reddit

Despite the challenges and risks, Reddit still has a lot of potential and opportunities to become a successful public company. It has a loyal and passionate fan base that is willing to pay for premium features and support the platform. It also has a unique and valuable data source that can be used to generate insights and recommendations for users, advertisers, and partners. Reddit also has a strong and innovative culture that encourages experimentation and creativity.

Reddit’s IPO could be one of the most anticipated and exciting events in the tech industry in the near future. The company could benefit from the high demand and valuation of tech stocks in the current market, as well as the increased interest and participation of retail investors, especially those who use Reddit’s own ‘r/wallstreetbets’ subreddit. Reddit’s IPO could also inspire and empower other online communities and platforms to follow suit.