The social media platform Reddit has meticulously outlined plans to initiate its initial public offering (IPO) in March, progressing with a listing under consideration for over three years.
Having submitted a confidential IPO filing in December 2021, Reddit aims to publicly file its documents in late February, commence its roadshow in early March, and finalize the IPO by the conclusion of March, as reported by Reuters on January 18.
The company, headquartered in San Francisco and valued at approximately $10 billion during a 2021 funding round, intends to offer around 10% of its shares in the upcoming IPO. The decision regarding the specific IPO valuation it will pursue will be made closer to the listing date.
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Other social media companies stock as a benchmark
Over the last year, significant gains have been observed in the stock performance of major social media companies, primarily propelled by a surge in technology stocks during elevated interest rates.
Meta Platforms (NASDAQ: META), the parent company of Facebook, has witnessed a more than threefold increase in its shares’ value in the past 12 months. Similarly, Snap (NYSE: SNAP) shares have seen a notable rise, climbing 60% over the same timeframe.
Using them as a benchmark, their similarity in the operations mode, and reliance on advertisement as the primary source of income, Reddit stock could also post solid numbers after its IPO.
Arguments for Reddit stock’s strong performance
The company, primarily reliant on advertising for revenue and supplemented by premium access, has yet to achieve profitability.
It is anticipated that Reddit will generate just over $800 million in advertising revenue in 2023, reflecting a growth of over 20% compared to the previous year, as reported on December 26.
In the previous year, Reddit intended to implement charges for companies seeking access to its application programming interface (API). Technology firms utilize this API for training large-language models essential in artificial intelligence (AI) applications.
Most importantly, The IPO would also assess the extent certain Reddit users are willing to support the company’s entry into the stock market. Over the past three years, numerous investors on the platform have played a role in driving multiple “meme” stock rallies, including those of GameStop (NYSE: GME) and AMC Entertainment Holdings (NYSE: AMC).
