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Reddit has filed documents for an initial public offering, a major milestone for the social media platform on its path to becoming a publicly traded company. Despite revenue growth in 2023, Reddit remains unprofitable. The planned IPO was also met with widespread skepticism among Reddit's loud users. They expressed concerns about the company's future direction and its ability to maintain user trust post-IPO due to recent moderation and product changes.
IPO Reddit Files
Reddit took a significant step toward becoming a publicly traded company, filing documents for an initial public offering with the Securities and Exchange Commission on Friday. The social media company reported revenue growth in 2023, with revenue rising to over $800 million from $666.7 million the previous year. Despite the increase in revenue, Reddit remains unprofitable, posting a net loss of $90.8 million in 2023. Although the company is still in the red, this represents an improvement from the company's net loss of $158.6 million in 2022.
As part of its IPO, Reddit plans to reserve shares for 75,000 of its most active users, directly incorporating its loyal online community into the listing. The filing highlights Reddit's challenges in building an advertising model that can compete with tech giants like Google (NASDAQ: GOOG) and Meta (NASDAQ: META). While the platform attracts over 50 million users daily, Reddit has struggled to effectively monetize its dedicated user base.
Reddit's IPO is considered the first “major” public IPO in the tech sector this year. The company is expected to list on the New York Stock Exchange as early as March under the ticker symbol “RDDT,” but the timing remains uncertain. This year, the offering will be closely watched to highlight broader trends in the tech industry.
Users are not excited about Reddit's IPO
The sentiment on Reddit following the company's IPO was overwhelmingly negative. Users criticized the platform's direction and expressed deep skepticism about its future success as a listed company.
Many comments in a recent /r/stocks thread focused on predictions that content moderation would increase post-IPO, such as user FalseListen's prediction: “As soon as they get rid of NSFW, they will go under.” User static_motion pointed this out , that co-founder Aaron Swartz was left out of Reddit's origin story. Others advocated for shorting Reddit stocks, with user zatonik bluntly stating: “Short selling to the point of being delisted.”
Criticism also focused on the potential for more advertising and paid subscriptions after the IPO. User ProfessorDerp22 wrote: “Get ready for an increase in ads and a paid subscription model.” Signals of Reddit's future direction included deals with tech giants like Google for AI training data, highlighted by user NiceTo. Overall, the comments largely reflect pessimistic views about Reddit's business model and skepticism about how the company can maintain user trust and engagement post-IPO.
This would not be the first time that users of the platform have expressed a negative opinion about the company's actions. Last year, Reddit mods and users protested changes that forced the shutdown of several third-party applications. The company also experimented with a blockchain-based “internet points” system, which was discontinued in October 2023
Can Reddit be the first big, successful tech IPO this year? Let us know in the comments below.
Disclaimer: The author does not hold or have any position in the securities discussed in the article.
About the author
Tim Fries is co-founder of The Tokenist. He has a B.Sc. in Mechanical Engineering from the University of Michigan and an MBA from the University of Chicago Booth School of Business. Tim served as a senior associate on the investment team in RW Baird's US private equity division and is also co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
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