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Social media platform Reddit has formulated detailed plans for its initial public offering (IPO), setting a tentative date in March.
The IPO, contemplated for over three years, would be the first major social media company listing since Pinterest’s debut in 2019.
The IPO unfolds amid fierce competition for advertising revenue from platforms such as TikTok and Facebook. Reddit and its peers are navigating the challenge of capturing advertising dollars in a landscape dominated by these global players.
The upcoming IPO will also test the willingness of Reddit users, who have played a notable role in “meme” stock rallies in recent years, to support the company’s market debut. Reddit, known for user-driven investment trends, could see its community play a role in the IPO’s success.
Reddit filed confidentially for its IPO in December 2021 and is expected to make its public filing in late February.
The company plans to initiate its roadshow in early March, with the IPO completion targeted by the end of March. Reddit aims to sell about 10% of its shares and will decide on the valuation closer to the listing.
Founded in 2005, Reddit is renowned for its discussion groups and user-driven content curation. Despite a valuation of approximately $10 billion in 2021, the company has yet to profit.
Reddit generates revenue primarily through advertising and premium access subscriptions. It delayed its IPO until approaching profitability.
In 2023, Reddit expects to generate over $800 million in advertising revenue, reflecting a 20% increase from the previous year.
The company has attributed past losses to investments in the platform and users’ comparatively lower engagement with advertising.
The rebound of large social media stocks over the past year, driven by a technology stock rally amid peaking interest rates, provides a favorable backdrop for Reddit’s IPO. Meta Platforms and Snap have experienced substantial stock value increases over the past 12 months.
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