Reddit IPO: Everything you need to know about Reddit

Popular – but controversial – online discussion forum Reddit has filed to go public. Find out everything we know about the Reddit IPO and company’s potential $15 billion valuation.

Reddit IPO: When will Reddit go public?

Reddit has confidentially filed for its IPO on December 15 2021. It was expected to go public in Q4 2021, but its more likely to be in early 2022 - sources claim the timing and size IPO will be subject to market conditions. The company is expected to IPO on the New York Stock Exchange. 

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What do Reddit users think about the Reddit IPO?

Reddit users on the forum r/WallStreetBets have already vocalised their concerns about the move to take the firm public. The main criticism seems to be that as a listed company, Reddit will need to start generating more income to please shareholders, which could result in users seeing more advertising and modifications to the experience.

How much is Reddit worth?

Reddit was valued at $10 billion in a private fundraising round in August 2021, but by the time of its IPO, the online message board company is aiming for a valuation of more than $15 billion.

How to trade Reddit

Once it lists, you can trade Reddit in the same way as any other share. In the meantime, choose from hundreds of other global stocks with

  1. Open a account, or log in if you’re already a customer
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

Alternatively, if you’re not ready to trade live markets – but want to practise ahead of the Reddit listing – you can set up a free demo account to trade in a no-risk environment. 

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What does Reddit do?

Reddit is an online discussion board and community, founded in 2005 by Steve Huffman and late activist Aaron Swartz. Despite not being as popular as other social media firms such as Facebook, Instagram and Twitter, Reddit has made its name with niche – and often controversial – discussion groups.

Reddit has more than 100,000 communities, in which over 53 million active daily users share their thoughts and ideas on a range of topics. In fact, Reddit is currently the 19th-most-visited website on the internet, and the sixth-most-popular social networking site.

The site allows users to post anonymously, which is supposed to encourage honestly and transparency. Any post can be voted on by the community; posts with the largest number of up votes are viewed more and hold greater authority.

Most recently, Reddit has become a hub of retail investors, flocking to the board r/WallStreetBets to discuss tips and ideas on stock trading. The community – known as a subreddit – was responsible for the rise of GameStop and other so called ‘meme stocks’. Their intentions were to profit as hedge funds covered their short positions, in what’s known as a short squeeze.

Find out more about the Reddit stocks to watch

How does Reddit make money?

Reddit makes its money through advertising on its site. It reported that in Q2 2021, it made $100 million in ad revenue – three times the amount it made in Q2 2020.

For users who don’t want ads on their feeds, there is a ‘premium membership’ available, which grants an ad-free experience as well as full access to the r/lounge, 700 free monthly coins, and other benefits. The membership costs $5.99 per month or $49.99 per year.

Reddit also generates money through Reddit Coins, which are virtual goods that Reddit users can purchase in bundles and gift to other Reddit users to reward them for their contributions and good content. Coin bundles cost between $1.99 to $199.99.

Other benefits to users holding Reddit Coins include access to the r/lounge. Which is an exclusive subreddit group for Premium members only.

Reddit has also raised capital through eight rounds of fundraising, generating a total of $919 million from 27 different institutional investors.

Is Reddit profitable?

No, Reddit isn’t yet profitable. In 2020, Reddit reported $170 million in revenue.

Learn how to read a company's earnings report.

What is Reddit's business strategy?

Reddit’s business strategy thus far is a pretty odd one, given that the firm sacrifices the opportunity to make money in order to keep its users happy. As we’ve seen, advertising space sales are the company’s primary revenue stream. However, Reddit does not require email addresses and does not track personal information, losing out on the opportunity to increase advertising through data exploitation, in order to keep its users anonymous.

And this is where one of the biggest challenges Reddit could face comes in: regulation. Due to the anonymity of users, there’s always the possibility of malpractice and manipulation, such as bots or even hedge funds driving users toward certain stocks. Reddit does already have moderators in place, but once it’s a public firm the level of scrutiny it’ll face will likely increase. Any thread to the anonymity of users could cause an exodus from the platform.

After half a decade neglecting its ad platform, Reddit has begun to invest heavily in this area before it goes public, so we may see the company reach profitability by 2022.

Reddit announced in 2020 that it was buying video creation app Dubsmash, entering into direct competition with TikTok.

The company also just hired its first ever chief financial officer, Drew Vollero (previous CFO for SNAP) in what many see as preparation for its IPO.

Who owns Reddit?

Reddit is owned by Condé Nast Publications, a global media company, who bought the company from founders Huffman and Ohanian one year after it was created for $10 to $20 million.

Current investors in Reddit also include Fidelity Investments, Andreessen Horowitz, Sequoia Capital and Tencent Holdings.

Board of directors of Reddit

Reddit’s board of directors includes:

  • Paula Price
  • Michael Seibel
  • Porter Gale
  • Sam Altman
  • Bob Sauerberg

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