Reddit Will IPO in 2023! Should You Invest?

Reddit, the popular online platform, has announced its plans to go public with an Initial Public Offering (IPO) later this year.

This move will allow interested investors to buy shares and become part owners of the company. In this article, we will discuss Reddit’s ownership, valuation, and whether or not you should invest in the Reddit IPO.

What is Reddit?

Founded in 2005 by Steve Huffman and Alexis Ohanian – who married tennis superstar Serena Williams – Reddit is an online platform that allows users to talk about their interests and passions.

Reddit allows anyone with an internet connection to seek advice from the community.
For example, the small business thread helps business owners connect and support each other.

Its popularity stems from the fact that people can share various forms of content, including text, images, links, and videos, as well as exchange opinions and advice, in total anonymity, without fear of reprisal or judgment.

Who Owns Reddit?

Like most tech startups, Reddit was founded by entrepreneurs who wanted to create a platform that encourages open dialogue. 

However, growing a startup without inviting outside investments is tough.

Over the past decade, Reddit has actively raised capital from venture capital investors:

• In October 2006, global mass media conglomerate Condé Nast Publications acquired a majority stake in Reddit.
• In 2011, Reddit became an independent subsidiary of Conde Nast’s subsidiary Advance Publications. At the time, Reddit was valued at $500 million.
• In 2014, Sam Altman led a $50 million funding round, attracting investors such as Peter Thiel and Marc Andreessen.
• In 2017, Reddit raised an additional $200 million and reached a $1.8 billion valuation.
• In 2019, Chinese tech giant Tencent led a $300 million funding round, bringing Reddit’s valuation to $3 billion.
• In 2021, Fidelity Investments raised $700 million, bringing the valuation to $10 billion.

Reddit stock ownership is currently split among Advance Publications, Venture Capitalists, private individuals, and Tencent.

The ownership structure was built using the Reddit’s M&A history.

Reddit’s popularity and rapid growth make it one of the most anticipated IPOs of 2023.

The question is: how expensive will the valuation be?

What is Reddit’s IPO Valuation?

Reddit has not yet announced the terms of its IPO.

At writing, it is unknown how many shares it will sell and at what price. 

However, reports suggest that Reddit would IPO at a $15 billion valuation, making it one of the largest IPOs of 2023. 

This valuation is not surprising, given that Reddit has become one of the most popular websites on the internet, with over 430 million monthly active users (MAU) as of 2021.

Reddit’s MUA count is increasing rapidly among iOS users.

That said, investors must look beyond user statistics to determine whether or not investing in the Reddit IPO is a good idea. In particular, they must look at the financials and profitability.

Is Reddit Profitable?

Reddit's revenue comes primarily from advertising, and the company has seen significant growth in this area. In 2021, its revenues reached the $350 million mark, a 105% increase from 2020. 

Reddit’s revenues are increasing at a rapid pace –but will the company generate profits?

To boost revenues, Reddit has launched various paid features, such as Reddit Coins and Reddit Premium, which provide additional benefits to users for a fee. These initiatives have been successful, generating over $17 million in 2021. 

Reddit Premium’s revenues are still modest, but it is worth noting that they are up 160% since 2018.

Unfortunately, despite its growing user base and revenues, it is widely reported that Reddit remains unprofitable. 

Will Reddit's IPO allow the company to generate sufficient growth capital to develop its activities and forge a path to profitability? This is the question that potential investors must ask themselves before investing.

Should You Invest in the Reddit IPO?

Investing in the Reddit IPO is a decision that should be made after careful consideration.

While the company has seen impressive growth in recent years, there are several factors to consider before making an investment.

Firstly, Reddit is a relatively young company. This means that it is still in the early stages of its existence, and there is definitely potential for the company to experience significant growth in the coming years.

However, investing in an IPO always carries some degree of risk.

IPOs are inherently risky so investors must do their due diligence before investing.

While Reddit’s recent growth is impressive, there is no guarantee that this growth will continue. The success of the Reddit IPO will depend on various factors, such as the state of the economy, its ability to continue attracting new users and advertisers, and its capacity to generate profits.

It is also worth noting that Reddit has faced criticism in the past for its moderation policies and its handling of controversial content. While the company has taken steps to address these issues, there is always the risk that these issues could resurface and harm Reddit's reputation.

Controversial moderators have plagued Reddit’s reputation.

In any case, the Reddit IPO is a significant event that will allow interested investors to become part owners of the popular discussion platform. The potential valuation of $15 billion is certainly impressive, and the recent growth in advertising revenue and premium features is encouraging.

However, investing in an IPO always carries some degree of risk, and potential investors should carefully consider the pros and cons before making a decision.

View The Reddit Pre-IPO Brochure

The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.