SOCIAL MEDIA
Why is Reddit going public now? What is the stock price?
After years of fostering online communities, the social media powerhouse Reddit has joined the stock market by raising nearly $750 milliom.
Social media giant Reddit made its Wall Street debut on 20 March, 2024, in a much-anticipated Initial Public Offering (IPO). This move signifies a new chapter for the online forum known for its vibrant communities and user-driven content. But what exactly prompted Reddit to go public, and how much does a piece of the platform cost now?
What is Reddit?
Think of Reddit as a giant online message board, broken down into millions of communities ("subreddits") for every interest. Users ("redditors") post news, funny content, or discussions, and others upvote or downvote them. The hottest stuff rises to the top of the "front page," making it a breeding ground for trends and news.
The site has 70 million active users a day.
The public listing allows them to access a wider pool of capital and potentially fuels further growth. However, it also brings increased scrutiny and pressure to deliver financial results. Investors may be turned off by the fact the site has never run a profit in its 20-year existence, and moves to monetise the site will come at the expense of the user experience at the core of their product.
However, it’s a potential win for Reddit’s most engaged users, as the company set aside a portion of the offering for its top contributors, allowing them to invest at the IPO price.
“Our users have a deep sense of ownership over the communities they create on Reddit. We want this sense of ownership to be reflected in real ownership — for our users to be our owners,” co-founder and CEO Steve Huffman said in a letter in Thursday’s filing. “Becoming a public company makes this possible.”
What is the stock price?
The public offering itself proved successful. Reddit priced its shares at $34 each, raising $748 million. This translates to a valuation of roughly $5.4 billion, which is still a significant achievement, even if lower than the initial target $10 billion from 2021.
The funds raised through the IPO will likely be used for several purposes. Reddit will need to invest in expanding its user base, acquiring other platforms, or developing new revenue streams. The company has hinted at exploring data sales to AI companies as a potential source of income, although this has sparked some user privacy concerns.