As Reddit prepares for its upcoming public listing, the company is predicting a valuation of up to $6.4 billion. Despite never turning a profit, the social media platform is set to offer its shares on the New York Stock Exchange.
Established in 2005, Reddit sets itself apart from other social media giants like Facebook or TikTok by creating an atmosphere where users feel more liberated to express themselves, albeit within the boundaries enforced by moderators in subreddits.
The influence wielded by Reddit communities became apparent during events such as the Gamestop saga in 2021, where users rallied together to drive up the share price of the American video game retailer, seeing a surge from an initial $20 to a peak of $350 due to coordinated efforts from Redditors.
According to filings in the United States, Reddit and its investors aim to sell 22 million shares priced between $31 and $34 each.
However, there are concerns among users that this move could substantially alter the essence of the platform. Some shares will be earmarked for select Reddit users and moderators. As an online forum for nearly two decades, Reddit enables users to post queries and engage in discussions on topics of interest to them.
While the company primarily generates revenue through advertising, it recently struck a deal with Google, allowing the tech giant access to Reddit data for training its artificial intelligence (AI) models.
While the company primarily generates revenue through advertising, it recently struck a deal with Google, allowing the tech giant access to Reddit data for training its artificial intelligence (AI) models.
Despite recording losses annually since its inception, including over $90 million last year, Reddit’s projected valuation falls short of the $10 billion it attained in a private fundraising round in 2021.
Among the current shareholders presently are media conglomerate Advance Magazine Publishers, Chinese tech titan Tencent, American investment firm Fidelity, and Sam Altman, the CEO of OpenAI, the organization behind ChatGPT.
In a letter to prospective investors, co-founder Steve Huffman noted: “Our users have a deep sense of ownership over the communities they create on Reddit. “We want this sense of ownership to be reflected in real ownership – for our users to be our owners. Becoming a public company makes this possible.”
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