Reddit IPO: What you need to know

Reddit, the vast online community with tens of thousands of subgroups focused on a wide range of topics, including cryptocurrency and a childless existence, has submitted a confidential report to the Securities and Exchange Commission (SEC). This is the firm’s first step toward an initial public offering (IPO), which has been closed.

The news will undoubtedly be exciting (or disappointing) for millions of dedicated Redditors, but it won’t be the most extensive offering of 2022. Reddit’s most recent funding round valued the company at roughly $10 billion—or about a seventh of Snap (SNAP), Snapchat’s parent.

The issue for potential investors is whether raising hundreds of millions via an IPO will allow Reddit to fund future development to compete with its competitors’ reach or if the business will always be limited to niche status in the social media realm.

Reddit IPO: About The Business

Reddit is many things: a people’s forum, a repository of the dopest memes, the not-so-secret weapon against Wall Street, and “the front page of the internet.” It may also be called a publicly-traded corporation valued at roughly $15 billion soon. The famous soc med network plans to go public this year (possibly as soon as this month). Reddit has already submitted preliminary IPO draft registration statements with the SEC and has engaged Morgan Stanley and Goldman Sachs to assist it.

Reddit has increased its employment as it goes through this change. According to data from the hiring firm Greenhouse by Thinknum, our parent company, Reddit, made a significant recruitment surge in mid-2021. The number of jobs posted on its active job listings increased by more than 120 percent from July to October. This effort may have been inspired by the firm’s most recent funding round, which ended in August and was valued at $10 billion. In addition, the company began a new recruiting campaign at the start of this year, with job advertisements increasing by 50%.

The Case for Reddit

One of Reddit’s most outstanding features is obvious: it is viral! As of January 2021, more than 50 million people use Reddit daily, generating more than 50 billion monthly page views.

More importantly, Reddit’s user statistics are decisively improving. Data may be difficult to obtain as a private company, yet Reddit has revealed that daily active users increased by 44% over the same month last year to 52 million in October 2020.

According to a recent Pew Research Center poll, 18% of Americans use Reddit, up from 11% in 2019. And here’s a number that should pique your interest: According to the same survey, almost a quarter of those who make more than $75,000 use Reddit.

According to the company, Reddit’s growing popularity has resulted in a significant increase in ad revenue. In the second quarter of 2021, Reddit generated more than $100 million in revenue, representing a nearly 200% growth over the year before.

In January 2021, Reddit’s rising star was evident when the meme stock bubble hit in real-time. After amateur day traders communities decided to pinch short-sellers and invest en masse, GameStop (GME) and AMC Entertainment (AMC) rose sharply in value. The idea for a group of investors to buy bitcoin as a form of investment was born on the r/WallStreetBets subreddit, and by the time the frenzy had reached its height, even Congress had gotten in on the action.

The Case Against Reddit

If only creating a fashionable social media network was enough to make money or be a good investment. To earn big bucks, you’ll need to have a leading position, which Reddit still has far away. According to Pew, around 81 percent of Americans watch videos on Youtube, and almost 77 percent use Facebook. Instagram is operated by roughly 40% of users, 28% check updates on LinkedIn, and a fifth communicate via Snapchat.

According to daily active users, Reddit is still playing in the minor leagues. Compared to more than 200 million daily active Twitter users in the same time frame, more than 50 million daily active Reddit users in January 2021 appear paltry. Moreover, Reddit’s text-only version, which resembles an old internet comment board, lags far behind its rivals. That doesn’t even consider the money swallowed up by Google’s search engine or Amazon’s marketplace.

In reality, Amazon, Google, and Facebook consume the majority of digital advertising revenue. According to eMarketer, this dominance has caused platforms with a more significant user base than Reddit to struggle. For example, Snapchat, which raked in more than $1 billion in sales during the third quarter of 2021, was roughly ten times Reddit’s second-quarter revenue. In addition, the firm has generated more than $3.7 billion in income over the past year. Nonetheless, the stock is down 7.3 percent for the year prior instead of a nearly 25 percent increase.

Reddit’s valuation is far lower than many of its social media rivals, although there are several reasons why that isn’t necessarily bad. However, it does imply how difficult the company’s path will be.

When is the Reddit IPO date?

The Reddit stock IPO date was projected to occur in Q1 2022, but it is now expected to be delayed owing to the armed conflict in Ukraine and the consequent drop in the stock market.

Reddit IPO: how to buy Reddit shares

Pre-listing

Grey market

The prices on the grey market are based on a company’s market cap at the end of its first trading day. Grey markets allow you to bet on this prediction. You can do all of the following if a grey market for Reddit is accessible:

• ‘If you feel the market cap will be greater than the price we quote, go ‘Buy’ (go long) and take a position.
• If you think the market capitalization will be less than the price we offer, you should ‘sell’ (go short) at that time.

IPO subscriptions

If you submit your interest in a Reddit IPO using our platform, we’ll connect you with PrimaryBid, which will provide subscription access ahead of time. In addition, your shares will be allocated at the same price as institutional investors if you pick PrimaryBid and us to register your interest in Reddit’s IPO. The firm allows retail investors into its stock.

Post-listing

We’ll give Reddit shares on the day of the company’s IPO process. The stocks will be accessible to buy once the market has opened. You have several options:

• You may use CFDs and spread bets to speculate on share price fluctuations.
• Using share dealing, you may buy and hold shares.

The Bottom Line

Now that the meeting is over, potential investors are in a wait-and-see mode. Over the next few months, Reddit will provide a more up-to-date financial situation and describe the prospects and dangers. Then, reasonable individuals will conclude their ability to generate future cash flows based on what they’ve seen.

Even if you like the platform, having an open mind is vital. Even though social media platforms and digital advertising are complicated businesses in their own right, they may be susceptible to additional government regulation in the years ahead, especially given Facebook’s recent scandal.

FAQs

When can I buy Reddit IPO?

Reddit sought to go public in December 2021, according to a confidential filing with the Securities and Exchange Commission (SEC). The platform, valued at $3 billion in 2020 and more than $10 billion by August 2021, plans to advance publications with a valuation of at least $15 billion.

Can you buy Reddit stock?

Reddit is a privately held business. Therefore its stock does not trade on any public market. However, you may be able to buy pre-IPO Reddit shares on private share markets, although availability and requirements are uncertain. In addition, you may be able to buy IPO shares from certain brokers, who may also have conditions for joining.

Is Reddit a public company?

It’s official. Reddit company announced it officially filed with the SEC to go public, meaning that r/WallStreetBets, the messaging platform behind r/WallstreetBets, is now a reality.

Although you may have waited, this is not something to be concerned about. After its most recent several funding rounds in August—which resulted in Reddit having a double-digit market capitalization—CEO Steve Huffman told the New York Times that it was only a matter of time; they were working out the details. Then, in early September, Reuters reportedly work.

Is Reddit IPO being put on hold for now?

It’s also possible that the social media behemoth is waiting for the situation to calm down before diving in. When Reddit does arrive, sources claim it will seek a $15 billion valuation, a big ask in today’s market when investors are wary of technology and innovation.

Given that it’s being advised by two of the world’s most well-known investment banks, Morgan Stanley and Goldman Sachs, it’ll have a close involvement with the capital-raise approach. Reddit raised $700 million in a private funding round less than a year ago, at a valuation of $10 billion, so there’s no need to hurry.

Even though average revenue per user is anticipated to be low compared to rivals — possibly $0.30 vs. Meta’s (Facebook) $7.89 — advertising income in Reddit’s second quarter last year grew 200 percent to $100 million.

There’s a subreddit for almost every conceivable niche, from r/investing to r/woodworking, and it has given birth to a platform that users adore. Moreover, there are no restrictions on what you write or say. Finally, it doesn’t monitor user information, implying that revenue has not been significantly damaged due to privacy changes from internet tech giants.

What do Reddit users think about the Reddit IPO?

Reddit users on the forum r/WallStreetBets have expressed their worries about Reddit going public. The most common complaint is that Reddit will be required to produce more income to please shareholders as a listed business, which may lead to increased advertising and user experience changes.