Popular social media platform Reddit is reportedly gearing up for its long-awaited initial public offering (IPO) in March, a significant move in the wake of intense competition for advertising revenue from platforms like TikTok and Facebook.
Sources familiar with the matter told CNBC that Reddit, valued at approximately $10 billion in a 2021 funding round, plans to sell around 10% of its shares in the IPO.
Reddit Expected to Launch IPO in March
Two of the sources noted that the company's public filing is expected in late February, followed by a roadshow in early March, and the completion of the IPO by the end of March.
According to CNBC, it would be the first IPO of a major social media company since Pinterest's debut in 2019. However, the sources cautioned that the company's plans could still change like what happened in the past.
They added that Reddit will decide on what IPO valuation it will pursue near the time of the listing. Founded in 2005, Reddit gained prominence for its unique discussion groups and user-driven content voting system.
Despite its popularity, the San Francisco-based company, which makes money mainly through advertising and a $5.99 monthly subscription price for access to premium content, has yet to gain a profit.
Reddit has attributed previous losses to investing in the platform and lower user engagement with advertising on its site compared to other social media platforms.
Reddit, which confidentially filed for its IPO in December 2021, held back from pulling the IPO launch until the company came near to profitability. The delay was also caused by rounds of market volatility, which shut down the IPO market for the last two years.
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Reddit's IPO Move
According to CNBC, the IPO move by Reddit will test the support of its user community, known for influencing "meme" stock rallies such as those witnessed with GameStop and AMC Entertainment Holdings.
While the company has not disclosed the valuation it will pursue, its IPO aims to raise funds amid the evolving landscape of social media competition.
Reddit, co-founded by Steve Huffman and Alexis Ohanian, expects to generate more than $800 million in advertising revenue in 2023, a more than 20% increase from the previous year.
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