After several successful rounds of private funding that have brought its valuation to $10 billion, Reddit is testing the IPO waters.
The social media platform known as the internet’s town hall said it confidentially filed paperwork with the U.S. Securities and Exchange Commission for an initial public offering, with the number of shares to be offered and the price range yet to be determined.
“The [IPO] is expected to occur after the SEC completes its review process, subject to market and other conditions,” Reddit said in a news release.
According to Reuters, Reddit is aiming for a valuation of more than $15 billion at the time of its flotation. In August, it was valued at $10 billion in a private investment round that raised $700 million.
“[Reddit] is hoping to be priced at a substantial premium to the typical tech stock IPO this year,” University of Florida finance professor Jay Ritter told Reuters, adding, “As with many money-losing companies going public, the rapid growth rate of revenue offers the potential to have high future profits, justifying a high multiple.”
The San Francisco-based company, which was founded in 2005 by Steve Huffman and Alexis Ohanian, topped $100 million in advertising revenue for the first time in the second quarter, an almost threefold jump from the same period last year. As of January, Reddit had more than 52 million daily active users and more than 100,000 communities.
According to The Wall Street Journal, “Reddit has been looking to build on the attention it gained when at the start of the year its WallStreetBets forum became a hot spot for the individual investors who rallied around GameStop and other stocks.”
“The episode brought in millions of new users, Reddit Chief Executive Steve Huffman said in its wake, as well as new advertisers, the source of the bulk of the company’s revenue,” the Journal noted.
After being acquired in its early days by the parent business of the Conde Nast media empire, Reddit later regained its independence, raising multiple massive funding rounds in recent years.