Reddit, with its diverse array of online communities, is poised to enter the high-stakes realm of the stock market. The company’s initial public offering (IPO) is set at $34 per share, scheduled for trading on the New York Stock Exchange under the ticker symbol “RDDT” on Thursday. This debut is expected to ignite discussions across Reddit’s own platform and other social media channels.
The IPO will serve as a litmus test for Reddit’s ability to transcend a tumultuous 20-year history marked by continual losses, management upheavals, and occasional user backlash, and establish a sustainable business model. Despite a delayed market kickoff, analysts anticipate a strong opening for Reddit due to limited supply and robust demand.
However, the IPO is likely to be volatile, with potential initial price spikes prompting some investors to sell shares swiftly, leading to price fluctuations. Reddit’s allure stems from its vast user base, which engages in a wide range of discussions, from light-hearted memes to profound existential concerns, and seeks recommendations from like-minded individuals.
With approximately 76 million users active in its myriad communities, Reddit allocated a portion of its IPO shares to its user base, while the remainder is expected to be acquired by institutional investors. Notable backers, including OpenAI CEO Sam Altman, have demonstrated confidence in Reddit’s prospects, with Altman emerging as one of the company’s largest shareholders.
Despite Reddit’s modest market value of $6.4 billion at $34 per share, it lags significantly behind industry giants like Meta Platforms. Reddit has yet to achieve profitability, accruing cumulative losses of $717 million, primarily due to its recent focus on revenue generation efforts, including ad sales and content licensing agreements.
Moving forward, Reddit aims to bolster ad sales and explore revenue streams through content licensing agreements, although regulatory scrutiny poses potential obstacles. Investors will closely monitor Reddit’s performance following its IPO, particularly during its next earnings call, as the company navigates its transition into the public market.
While Reddit’s leadership history has been marred by instability, including the departure and return of co-founders Steve Huffman and Alexis Ohanian, current CEO Huffman remains focused on steering the company through challenges. Despite past upheavals, Reddit’s resilience and evolution position it for future growth and success in the dynamic landscape of online communities and finance.
