Reddit files confidential to the public after explosive growth driven by meme stock chatter

In this photo illustration a silhouette hand holding a mobile phone with a Reddit logo in the background.
Reddit has applied for a stock exchange listing.

  • Reddit’s application comes as US IPOs reached record highs in 2021, driven by ample liquidity.
  • Reddit saw explosive growth as retail investors flocked to their bulletin boards to get tips on meme stocks.
  • Its advertising revenue increased almost three times over the year in the second quarter.

Reddit, known for its bulletin boards that became the go-to destination for day traders during this year’s meme stock frenzy, said Wednesday it had confidentially applied for a first public offering from U.S. securities regulators.

The forum, which has more than 11 million members, generated strong demand from retail investors for meme shares – to GameStop in January and AMC Entertainment in June – which led to the explosion in meme shares.

Several hedge funds were hit by the stock rise as they had bet against the Reddit darling in question.

Reddit was founded in 2005 by Steve Huffman and entrepreneur Alexis Ohanian and was valued at $ 10 billion in a private fundraising round earlier this year.

Reuters reported in September that the company was hoping for a valuation of more than $ 15 billion at the time of an IPO.

The application comes as US IPOs reached record highs in 2021, driven by ample liquidity due to accommodating monetary policy. Robinhood Markets, Coupang and Coinbase Global all launched IPOs in the US this year.

Reddit had about 52 million daily active users and over 100,000 communities, or “sub-reddits”, in October last year.

The company experienced explosive growth as retail investors flocked to their bulletin boards earlier this year to get tips on trading GameStop and other so-called meme stocks.

San Francisco-based Reddit reported $ 100 million in advertising revenue in the second quarter, a nearly triple jump from the same period last year.

In March, the company hired Drew Vollero – who as the first CFO of Snap Inc. guided its transition to a public company – as its first CFO.

The company’s largest investors include Fidelity Investments, Andreessen Horowitz, Sequoia Capital and Tencent Holdings.

Reddit did not disclose the number of shares to be offered or the price range for the listing in the draft registration statement with the US Securities and Exchange Commission.

Meanwhile, on WallStreetBets, subreddit, where many meme stock traders are discussing strategy, members began joking about boosting Reddit’s stock once it goes public.

Comments like “Reddit to the moon” and “instant meme stock” were posted on the bulletin board.

Some did not like the idea of ‚Äč‚Äčlisting the social media platform. One user said of the listing: “It’s pretty depressing to hear. Reddit has been the place I call home online for a long time and that means there will be a lot of changes, probably in the worst. Nothing lasts forever, think I. “

Leave a Comment