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According to a recent eMarketer survey, when it comes to social media sites accessed by US users, Reddit ranks 8^th with over 46 million users. While Facebook and Instagram are the leaders by a fair margin, Twitter came in close at 56 million users. After staying away from a listing for over 15 years, Reddit appears to be willing to test the stock markets out. Last year, it filed confidentially to go public. It has yet to disclose finer details of the listing though.

Reddit’s Offerings

San Francisco-based Reddit was founded in 2005 by Alexis Ohanian and Steve Huffman as a platform for online communities. It hosts user-generated content allowing users to submit links, create content, comment and vote on user-generated content, and host discussions on topics that interest them. Posts are classified under various Subredits or topics and can range from sports to gaming, pics, videos, and many more. Today, Reddit is the fourth most visited site in the US and the eighth most visited site in the world.

Due to the popularity of the platform, Reddit was acquired by Condé Nast within a year of its inception. While there was no disclosure of the transaction price, analysts pegged its valuation in the range of $10-$20 million. In a few years, Reddit was spun off to become an independent subsidiary of Advance Publications, the parent company for Condé Nast.

Initially, Reddit had favored a hands-off approach to content management. But in the past few years, given the requirement to manage social media, the company has enforced stricter rules around content creation on its site. Most of its content is managed by subreddit moderators. Despite the content policy, Reddit has been able to influence people significantly. In 2021, it was responsible for the short squeeze on several stocks, including GameStop and AMC, that resulted in a DoJ enquiry into prominent short sellers. The company claims that its site has over 460 million total users, is accessed by over 50 million users every day and is home to over 100,000 active communities. Reddit’s user base may still be tiny compared to the other social media players out there, but it boasts of its unique ability to host users who pioneer a new content type, like the meme, or drive up the popularity of certain kinds of content.

Reddit’s Financials

Reddit earns revenues through its self-service advertising platform, and a subscription-based service that offers users additional features such as ad free views, and comment highlighting to name a few. Reddit does not disclose its financials, but in a recent report it was revealed that it had reached advertising revenues of $100 million in advertising revenue for the first time in the second quarter of 2021, growing 192% over the year. According to eMarketer, Reddit roughly doubled its revenues from $161 million in 2020 to $305 million in 2021 and was looking to grow to $424 million this year.

Reddit has raised $1.3 billion in funding so far from investors including SV Angel, Bracket VC, Andreessen Horowitz, Edward Lando, Fidelity Investments, Coatue Management, Alrai Capital, Sequoia Capital, VentureSouq, Vy Capital, Y Combinator, Jared Leto, Snoop Dogg, Rick Marini, Paul Buchheit, Jessica Livingston, 500 Startups, Mariam Naficy, A. Capital Ventures, Kevin Hartz, Thrive Capital, and Philip Kaplan. Its last round of funding was held in August last year when it raised $700 million at a valuation of $10 billion.

Last December, Reddit had confidentially filed paperwork for an IPO later this year. It is said to be working with Morgan Stanley and Goldman Sachs for its $15 billion IPO, but has not disclosed the timeline. The recent turbulent market conditions may have delayed the listing.

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