Reddit, the online message board operator that has become a favorite destination for day traders chasing this year’s frenzy over so-called stock meme, is looking to hire investment bankers and lawyers for an initial public offering (IPO) in New York, two people familiar with the matter said on Thursday.
Reddit was valued at $10 billion (about INR 73,130 crores) in a private fundraising round last month. When the IPO takes place early next year, Reddit expects it to be valued at more than $15 billion (about INR 109,700), one of the sources said.
The sources warned that the timing and size of the IPO are subject to market conditions and asked not to be identified because the preparations are confidential. A Reddit spokesman declined to comment.
Reddit’s decision to hire consultants for its IPO has not previously been reported. In a recent interview with the New York Times, Chief Executive Steve Huffman said the company was planning to go public but had not decided when.
Reddit was founded in 2005 by Huffman and manager Alexis Ohanian. It became known for its niche discussion groups, lagging behind the popularity of other major social media platforms such as Facebook and Twitter.
The San Francisco-based company has seen explosive growth, however, as a result of retail investors flocking to its forums earlier this year for tips on trading GameStop and other meme stocks. Most Wall Street analysts considered the meme stocks to be extremely overvalued.
Reddit had about 52 million daily active users and more than 100,000 communities, or “sub-reddits”, in October of last year. Huffman said it gained millions of new users earlier this year during the height of the commercial frenzy, but the latest user numbers have yet to be released.
Most of the company’s money is made from advertising. It posted $100 million (approximately Rs.730 crores) in advertising revenue in the second quarter, an almost threefold jump over the same period last year.
Reddit’s biggest investors include Fidelity Investments, Andreessen Horowitz, Sequoia Capital and Tencent Holdings.
Online brokerage Robinhood Markets, whose trading app has also become popular with retail investors, capitalized on the meme stock frenzy by launching an initial public offering in July. Robinhood itself has become a stock meme on Reddit, and its shares have risen about 28 percent since its debut on the stock market.
© Thomson Reuters 2021