MarketsFeb 22, 2024
Corporate Reddit Is Here, But Can It Convince Investors That It’s Cooler and More Relevant Than Ever?
Tech Listing
Noah Weidner
Discover
Avid social media users can agree on one thing: Reddit is in a league of its own. While other platforms come and go, Reddit remains a staple on our screens despite angering its community time and again. CGP Grey once said, “Reddit makes you feel more like a citizen of the internet than a citizen of your own country.” But what happens when Reddit goes corporate?
Reddit or not, here it comes: Yesterday, Reddit filed for its long-awaited IPO, kicking off the process of bringing the social media giant to the New York Stock Exchange (NYSE) under the ticker. Last year, the company’s sales jumped 21% to $804M, active users grew by 27%, and net losses fell 43% to $91M.
Reddit rolled into 2024 with $1.2B+ in cash, more than a fifth of its proposed valuation — thanks in part to last summer’s decision to lay off 5% of its workforce, which helped narrow its losses. Despite its widespread popularity, Reddit has struggled to build a concrete business model but found new life during the pandemic as online communities blossomed (shout-out to r/wallstreetbets).
While Reddit stands apart from its competitors in many ways, its revenue streams aren’t so different. Despite positioning itself as a community-driven alternative to social giants, it has remained an afterthought for advertisers — below Meta, TikTok, and even Twitter/X. To catch up, the company is exploring options to boost its revenue:
Throw a bone: In a concession to its users, the company offered 75K of its most engaged users access to shares at its IPO price. But sometimes, being an early bird doesn’t pay off. Users of another retail crowd favorite, Robinhood (NASDAQ:HOOD), were given similar access during its 2021 IPO. Since then, has plummeted nearly 60%. And while the market landscape is different today, buying into companies right when they go public often spells trouble for investors.
