Reddit has announced that it is ready for an IPO.
Summary
Reddit heading towards public listing
In a statement published on Wednesday, Reddit, an app that has become famous in the crypto world, especially following the story of Gamestop‘s stock, which soared thanks to purchases by a popular community, announced that it was preparing for a listing on Wall Street.
Reddit’s numbers
According to news sources, Reddit raised around $700 million in new funding in August, reaching a value of more than $10 billion.
At the end of October, Reddit said it had raised over $100 million in advertising revenue alone for the second quarter of 2021, an increase of almost 200% on the previous year.
At the end of August, Reddit had over 50 million active users, with communities such as r/WallStreetBets with thousands of active users that were able to stand up to large US hedge funds that were betting down on the shares of US video game chain Gamestop.
Expectations for Reddit’s IPO
Reddit said in a note:
“The initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions”.
No details have been released as to how and when the IPO would be launched, but it would certainly be imminent, and would aim for a valuation of around $15 billion.
In August, the company’s co-founder and CEO Steve Huffman had told the New York Times that Reddit:
“still planning on going public”.
Adding:
“All good companies should go public when they can”.
However, the focus is on whether and how the company can achieve its goals, especially considering how stock markets could enter a phase of uncertainty over the Fed’s expected decisions on rates and bond purchases to combat rising inflation in the US.
University of Florida finance professor Jay Ritter told Reuters:
“(Reddit) is hoping to be priced at a substantial premium to the typical tech stock IPO this year. As with many money-losing companies going public, the rapid growth rate of revenue offers the potential to have high future profits, justifying a high multiple”.
Earlier this year, Reddit announced a partnership with the Ethereum Foundation to bring the social network to the blockchain, after launching its tokens on Ethereum in 2020 to allow its users to make payments on the platform.
