Reddit finally files to go public; reveals $90.8 million in losses

Popular social aggregation platform Reddit has officially filed for its long-anticipated initial public offering (IPO), submitting its S-1 filing to the Securities and Exchange Commission (SEC) following years of anticipation. The company intends to trade on the New York Stock Exchange under the ticker symbol RDDT.

Marking the first significant tech IPO of the year and the first social media IPO since Pinterest went public in 2019, Reddit reported $804 million in annual sales for 2023, representing a 20% increase from the previous year. Its primary revenue stream stems from online advertising sales through its website and mobile app. Notably, Reddit moderators will have the opportunity to participate in the IPO through the company’s directed share program.

This IPO filing arrives nearly two decades after Reddit’s inception and signifies a pivotal moment for the platform, which still trails behind its social media counterparts in terms of commercial success, notably Facebook and Twitter.

In conjunction with the filing, Reddit disclosed that its net loss narrowed to $90.8 million in 2023, with revenue growth hovering around 21%, Reuters reported.

While Reddit’s IPO announcement wasn’t entirely unexpected, the company’s journey to this point has been complex. Originally sold during its early stages, Reddit later spun back out into independence. Now, as it prepares to go public, Reddit boasts over $800 million in revenue for 2023, up from $666.7 million in the previous year.

However, despite these figures, Reddit remains unprofitable on both a GAAP and adjusted basis, continuing to rely on cash to sustain its operations. This persistent lack of profitability may impact the company’s potential valuation upon listing.

In 2022, Reddit reported a net loss of $158.6 million and an adjusted EBITDA of negative $108.4 million. By 2023, these figures showed improvement, with a net loss of $90.8 million and a negative adjusted EBITDA of $69.3 million. Although the company’s free cash flow also saw improvement, moving from –$100.3 million to –$84.8 million during the same period, challenges regarding profitability persist.

While Reddit did achieve a notable milestone in the final quarter of 2023, posting a revenue peak of $249.8 million along with a net profit of $18.5 million, the company’s free cash flow remained negative at –$22 million for the quarter, underscoring ongoing financial challenges.

Throughout its journey, Reddit has raised over $1 billion in private funding, including a significant $410 million Series F round in 2021 and a smaller $368 million Series E round earlier that year. These funding rounds propelled Reddit’s valuation to $6.4 billion with the Series E and approximately $10 billion with the Series F, marking significant milestones in its growth trajectory.

Reddit has been growing exponentially since its inception about two decades ago. Reddit has 7.57 billion in monthly traffic. The social news aggregation site has grown to become the ninth-most-visited website in the world and the third-most-visited website in the U.S., according to data from SemRush.

Founded in 2005 by Alexis Ohanian, Reddit is a social news aggregation, web content rating, and discussion platform. As of October 2020, Reddit ranks as the 17th-most-visited website in the world and the 7th most-visited website in the US, according to Alexa Internet.