September 2, 2021
(Reuters) – Reddit Inc, the operator of an online bulletin board that has become a reliable destination for day traders chasing the enthusiasm for so-called “meme” stocks this year, has turned investment bankers and lawyers into an initial public offering. In New York, two people familiar with the matter said Thursday.
Reddit was valued at $ 10 billion in a private funding round last month. By the time the IPO takes place early next year, Reddit hopes it’s worth more than $ 15 billion, one source said.
Sources warned that the timing and size of the IPO would depend on market conditions and demanded that the preparation be confidential and not identified. A Reddit spokesman declined to comment.
Reddit hasn’t reported a move to hire an advisor for an IPO, but in recent months there has been a lot of speculation about the company’s public offering after it has been private for years. In a recent interview with The New York Times, CEO Steve Huffman said the company was planning to go public, but hadn’t decided when.
Reddit was founded in 2005 by entrepreneur and investor Huffman and the late Internet activist Aaron Swartz. Behind the popularity of other major social media platforms such as Facebook Inc and Twitter Inc, it has become known in niche discussion groups.
However, the San Francisco-based company has grown explosively as a result of individual investors flocking to the bulletin board earlier this year seeking tips on trading GameStop Corp and other meme stocks. Most Wall Street analysts considered meme stocks to be overestimated.
As of October last year, Reddit had about 52 million active users per day and over 100,000 communities (“sub reddit”). Huffman said he had gained millions of new users during a trading frenzy earlier this year, but the number of recent users hasn’t been announced yet.
The company makes most of its money through advertising. Advertising revenue for the second quarter was $ 100 million, almost tripled from the same period last year.
Reddit’s largest investors include Fidelity Investments, Andreessen Horowitz, Sequoia Capital and Tencent Holdings.
(Report by Anirban Sen in Bangalore, additional report by Echo Wang in New York, edited by Rosalba O’Brien)
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