Reddit Discloses Finances in IPO Filing, Will Let Influential Moderators and Users Buy Shares at Offering Price
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Reddit, the popular internet discussion “community of communities,” filed a registration statement Thursday for its long-awaited initial public offering.
The number of shares to be offered and the price range for the proposed offering have not yet been determined. Reddit intends to list its Class A common stock on the New York Stock Exchange under the ticker symbol “RDDT.”
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In the S-1 filing with the SEC, Reddit reported 2023 revenue of $804.0 million, up 21% year over year, and a net loss of $90.8 million in 2023, compared with a $158.6 million loss the year prior.
In December 2023, Reddit had more than 500 million visitors and in the fourth quarter had an average of 73.1 million daily active unique users worldwide. The company had 2,013 full-time employees as of the end of 2023, up from 1,942 a year earlier.
In an unusual move, Reddit is giving users who have “meaningfully contributed to Reddit community programs” — including moderators — the chance to buy shares in the company at the IPO price. That’s a privilege normally reserved for employees, “friends and family” or investors.
According to Reddit, users and moderators who created an account on or before Jan. 1, 2024, are potentially eligible for the directed share program. Those will be invited to participate in six phased “priority tiers,” based on that participant’s contributions to Reddit. Shares purchased through the directed share program will not be subject to the terms of the lock-up agreement or market standoff restrictions.
“I have never been more excited about Reddit’s future than I am right now,” Reddit CEO Steve Huffman wrote in the S-1 filing. “We have many opportunities to grow both the platform and the business, the latter through advertising, monetizing commerce on the platform and licensing data.”
In the filing, Reddit said that in January 2024 it entered into “certain data licensing arrangements” totaling $203 million with terms ranging from 2-3 years, with a minimum of $66.4 million of revenue to be recognized in calendar year 2024. “We believe our growing platform data will be a key element in the training of leading [artificial intelligence] large language models (‘LLMs’) and serve as an additional monetization channel for Reddit,” the company said.
The company didn’t disclose which AI company or companies it had licensed data to, but it’s worth noting that OpenAI CEO Sam Altman is a major shareholder, owning 8.7% of Reddit’s current outstanding shares. According to the filing, Advance Publications (parent of Condé Nast, which formerly owned Reddit) owns 30.1% of outstanding shares, while China’s Tencent Holdings owns and 11% and Fidelity owns 8.4%.
Huffman owns 3.1% of the company’s outstanding shares and Reddit COO Jen Wong holds 1.5%, per the filing. Huffman’s compensation package for 2023 was worth $193.2 million, which included salary of $341,346, stock awards worth $98.3 million and stock options valued at $93.8 million. Wong’s total comp of $92.5 million included a base salary of $583,820, stock awards of $45.7 million and stock options worth $45.7 million.
Also in the filing, Reddit provided a long list of competitors, including Google, Meta (including Facebook, Instagram, Threads and WhatsApp), YouTube, Wikipedia, Snap, X (formerly Twitter), Pinterest, TikTok, Roblox, Discord and Twitch. In addition, “as we pursue opportunities to empower our user economy, we expect to face competition from existing online marketplaces,” Reddit said, including Facebook Marketplace, Nextdoor, Craigslist, Poshmark, Etsy and Roblox.
The company in December 2021 confidentially submitted a draft registration statement with the SEC for a proposed IPO.
Reddit, which once billed itself as “the front page of the internet,” currently carries the slogan “Dive into anything.” Last June, the company said it was eliminating 90 jobs, laying off about 5% of its total employee base, in a restructuring designed to position the company to break even in 2024.
Reddit was acquired by Condé Nast in 2006, soon after it launched in 2005. In 2011, Condé Nast spun out the site, while parent Advance Publications retained a minority stake. Other investors in Reddit include Vy Capital, Sequoia Capital and Andreessen Horowitz.
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