Meme stock engine and message board giant Reddit moved a step closer to a public offering, launching the process this week via a confidential filing with the SEC.
It’s been a frenetic year for initial public offerings, with IPOS of more than 900 companies after many businesses and investors sat out an uncertain 2020. Online brokerage Robinhood Markets, the trading app that was also at the center of the meme stock frenzy that started in January, had its IPO in July. (IPOs have raised nearly $300 billion in 2021.) Reddit did not disclose the number of shares to be offered, the price range of the IPO or a timeline in the confidential filing, which it said was a draft registration statement.
“We are in a quiet period, and for regulatory reasons we cannot say anything further,” the company wrote in a tweet. It said “the initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions.”
San Francisco Reddit, launched in 2005, founded by University of Virginia roommates Steve Huffman (currently CEO) and Alexis Ohanian, with Aaron Swartz. As it grew it became known for its message boards and chat rooms on a wide array of topics and events like digital town halls with celebrities and politicians. Reddit was sold to Condé Nast in 2006, and the publisher’s parent, Advance Publications, spun it off 2011 but remains a shareholder. Investors include Fidelity, venture-capital firms Andreessen Horowitz and Sequoia Capital and Chinese tech conglomerate Tencent Holdings.
Advertising-based Reddit had more than 50 million daily users as of January, according to its website.
The name Reddit moved beyond the cognoscenti into public awareness last year with an explosion of day traders, also called retail or small investors. They all but upended the financial system by piling into certain stocks seen as ailing and besieged by short sellers, and driving them higher. Redditors on highly engaged chatrooms including WallStreetBets exchanged financial advice and pushed each other to hold the stocks, and not sell. GameStop was first out of the gate followed soon after by theater chain AMC Entertainment. Redditors and other small investors who gleefully bought and held the shares helped the struggling company avoid bankruptcy — since it was able to offers stock at the new inflated prices. CEO Adam Aron has become extremely entwined with the retail investors who now make up the majority of AMC shareholders.
The meme stock frenzy triggered an outcry by traditional financial institutions, hearings in Congress and close looks by the SEC and the Federal Reserve.
Reddit was valued at $10 billion in a private fundraising round in August. According to a Reuters report earlier this fall, Reddit was hoping to hit a valuation of more than $15 billion by the time it planned to list shares.
(In comparison, Twitter is valued at $35B and Meta (formerly Facebook) at $1T.