Reddit publicly files IPO papers, detailing plans to license data, sell more ads

Social-media platform Reddit — the home of AMAs, Wall Street Bets and thousands of other online communities — publicly filed its registration statement for an IPO on Thursday, detailing plans to push further into advertising, data sales and analytics, and what it called its budding user-driven economy.

The company, founded in 2005, plans to trade on the New York Stock Exchange under the ticker symbol “RDDT.” The filing did not disclose the number of shares to be offered or their potential price. Morgan Stanley, Goldman Sachs, JPMorgan and BofA Securities are the lead book-running managers.

Reddit first confidentially filed a draft registration statement for a proposed public offering in 2021.

Reddit also said it would offer some of those shares in the IPO to its users and moderators, depending on their reputation and contribution to the platform. Those participants would need to be over the age of 18, live in the U.S. and have an account on or before Jan. 1.

“We want this sense of ownership to be reflected in real ownership — for our users to be our owners,” co-founder and Chief Executive Steve Huffman said in Reddit’s IPO filing. “Becoming a public company makes this possible. With this in mind, we are excited to invite the users and moderators who have contributed to Reddit to buy shares in our IPO, alongside our investors.”

The company’s public debut would arrive amid potential traces of life in the IPO market this year, and as Reddit tries to compete with far-bigger rivals such as Meta Platforms Inc.
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and TikTok. Some digital-media outlets, meanwhile, are waiting for a bigger recovery in the digital-ad market.

Reddit, in its IPO prospectus, also warned that user engagement can come and go based on big cultural events — like the pandemic or Russia’s invasion of Ukraine. And it cited the prospect of rivals copying its own features as a potential risk.

The company grew sales last year to $804 million, up 20.5% year over year. However, it is losing money. It put up a net loss of $90.8 million last year.

Still, the company said that in December, it drew more than 500 million visitors. In the quarter that ended on Dec. 31, Reddit said it had an average of 73.1 million daily active uniques — or someone who drops by at least once in a 24-hour period. And in the prospectus, Reddit tried to pitch itself as a massive repository for human experience and interaction.

“Whatever people are into or going through, it is on Reddit,” Huffman said in the filing.

He said Reddit was developing more ways for users to make money on the platform. The filing highlighted moves to allow users earn money by creating avatars, offering photo-editing services, selling watches and commissioning art. And it said it planned to offer more developer tools, and increase the ways users can “recognize contributors with real-world money to incentivize and reward quality content creation.”

Reddit said it takes a cut from avatar creators’ earnings, and said building out the user economy would “allow us to grow new revenue streams beyond advertising.”

Similar efforts haven’t always worked. When Hasbro Inc.’s
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Wizards of the Coast segment, which oversees the role-playing game “Dungeons & Dragons,” proposed a royalty payment on higher-earning game developers whose work used the D&D infrastructure, the efforts backfired last year following protests from creators.

Reddit also wants to find ways to make the ads that appear on its site more prominent, more AI-driven and more precise. It said it wanted to offer more video ads, and ads in new places, like comment threads and search pages, along with existing ads in the home feed.

Reddit also said it was “in the early stages of allowing third parties to license access to search, analyze, and display historical and real-time data from our platform.” Customers, it said, could pay for real-time data feeds of anonymous, public discussions on Reddit. The filing also said the content on Reddit could be used to feed AI and large language models.

“Reddit is one of the internet’s largest corpuses of authentic and constantly updated human-generated experience,” the filing said. “In an increasingly data-driven world, we recognize that this information is increasingly important for a multitude of different uses and applications.”

“We believe the internet should work for consumers and they should be able to find the information they need or experiences they want,” the filing continued. “And, organizations need to prioritize sources of real-time human perspectives — from a company looking for feedback on a new consumer product to investors trying to capture market sentiments or signals — and Reddit provides a differentiated solution.”

Separately, Reddit announced a deal that will allow Alphabet’s
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Google to use Reddit posts to train its AI models and improve Google Search. The deal, valued at about $60 million, will “make it easier to discover and access the communities and conversations people are looking for on Reddit,” the company said.

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