Two people familiar with the situation told the Reuters news agency that Reddit is looking to engage investment bankers and attorneys for an initial public offering in New York.
In a private financing round last month, Reddit was valued at $10 billion. According to one of the individuals, the online discussion board firm hopes to be valued at more than $15 billion by the time the IPO takes place early next year.
The sources emphasized that the IPO’s timing and the amount will be determined by market circumstances, and they asked not to be identified because the preparations are private. A representative from Reddit declined to respond.
Reddit’s decision to engage consultants for its IPO was not previously disclosed, although there has been a lot of speculation in recent months about the company’s ambitions to go public after years of being private.
Steve Huffman, the firm’s CEO, stated in a recent interview with the New York Times that the company was aiming to go public but had not determined when.
Huffman, entrepreneur, and investor Alexis Ohanian, and late internet activist Aaron Swartz launched Reddit in 2005. It became recognized for its unique discussion groups, despite the fact that it lagged behind other major social media platforms like Facebook and Twitter in terms of popularity.
Retail investors flocked to the San Francisco-based company’s message boards for recommendations on trading GameStop and other meme stocks at the start of the year, resulting in rapid growth. The meme stocks were judged overpriced by the majority of Wall Street experts. As retail traders coordinated their efforts on forums like Wall Street Bets, the number of persons utilizing the discussion site increased in 2021. They hoped to benefit by driving the price of GameStop, AMC, and other heavily shorted stocks upward when hedge funds covered their short holdings. The discussion on the WSB subreddit took on a populist tone, with disgruntled newcomers banding together to give Wall Street a bad name.
In the 2000s and 2010s, Reddit was recognized for its specialized discussion communities, or “subreddits.” Other big social media competitors, such as Facebook and Twitter, trailed the San Francisco-based firm.
As of October of last year, Reddit has over 52 million daily active users and over 100,000 communities, or “subreddits.” Huffman has stated that during the peak of the trading frenzy earlier this year, it garnered millions of new members, but more current user counts have yet to be disclosed.
The majority of the company’s revenue comes from advertising. In the second quarter, it recorded $100 million in advertising income, up nearly threefold from the same period last year.
Fidelity Investments, Andreessen Horowitz, Sequoia Capital, and Tencent Holdings are among Reddit’s largest investors.