Reddit plans to launch IPO in March: Report

Reddit is gearing up for its much-anticipated initial public offering (IPO) in March, news agency Reuters reported.

If successful, Reddit's IPO would be the first of its kind for a major social media company since Pinterest's debut in 2019.

However, the company faces fierce competition for advertising revenue from platforms like TikTok and Facebook.

The IPO also presents a unique test for Reddit, as it measures the willingness of its user base to support the company's stock market debut.

The platform, known for hosting lively discussions and meme-fueled stock rallies, has seen users play a pivotal role in events such as the GameStop and AMC Entertainment Holdings stock surges.

Reddit, planning to go public in March, filed confidentially for its IPO in December 2021 and aims to complete the process by the end of that month, as per the report.

Sources mentioned in the report also reveal that Reddit, based in San Francisco and valued at approximately $10 billion in a 2021 funding round, is eyeing the sale of about 10 per cent of its shares in the IPO.

The exact valuation the company will pursue at the time of listing is yet to be decided.

However, insiders caution that Reddit's IPO timeline might face delays, as has been the case in the past.

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit has gained popularity for its unique discussion groups and user-driven content curation.

Despite its prominence, the platform has yet to turn a profit, with revenue primarily derived from advertising and a $5.99 per month premium access offering.

The decision to delay the IPO until approaching profitability stems from market volatility experienced over the last two years. Reddit's losses are attributed to user engagement with advertising lagging behind other social media platforms.

In a Reddit post last June, Huffman acknowledged the company's losses, attributing them to investments in the platform. The company, however, expected to turn the tide and become profitable soon.

In a bid to boost revenue, Reddit announced plans to charge companies for access to its application programming interface (API). This move caused some discontent among users who rely on third-party apps to access Reddit.

Despite these challenges, Reddit's IPO announcement aligns with the broader trend of social media stock rebounds.

Over the past year, Meta Platforms, the company behind Facebook, witnessed a threefold increase in its shares, while Snap experienced a 60 per cent rise during the same period.