After a lot planning, and establishing new foundations for its enterprise efforts, Reddit is reportedly looking to launch its initial public offering (IPO) in March, marking the subsequent stage for the forum-based social app.
As reported by Reuters:
“Reddit has drawn up detailed plans to launch its IPO in March, moving forward with a listing it has been eyeing for more than three years, according to people familiar with the matter.”
Certainly, rumors of a Reddit IPO have been floating round for a while, with more moderen insights suggesting that the platform will probably be seeking a $15 billion valuation to form its IPO providing.
Which is a loopy excessive quantity.
For comparability, X, which presently claims greater than 250 million daily users, and can usher in over $2 billion in revenue for FY 2023, is presently valued at $19 billion. Reddit sees some 70 million daily actives, virtually 1 / 4 of X’s viewers, and is ready to usher in $800 million in ad revenue for the year.
It appears, then, that Reddit is probably going price considerably lower than X, whereas Snapchat, at 406 million daily actives, is presently valued at $27 billion.
The info would counsel that Reddit ought to be eyeing a far decrease valuation, although in accordance with Reuters, the platform was valued at around $10 billion as per its final funding spherical in 2021.
And given the efforts that it’s gone to since, you may think about that Reddit would need to suppose it’s price considerably extra now, although the way you quantify that, and its future potential, will play an enormous half in its prospects.
Over the previous few years, Reddit has undergone a large clean-up, as a part of its mission to make it a extra interesting proposition for advertisers.
Again in 2020, within the wake of the George Floyd incident, Reddit updated its policies around racism and hate speech, which resulted in 1000’s of its most controversial communities being shut down fully. Since then, Reddit has applied a spread of further guidelines to wash up its communities, whereas extra just lately, it’s additionally been trying to implement extra management, by way of new processes for moderators, to be able to scale back its reliance on volunteer contributors.
These adjustments have been controversial, they usually have impacted Reddit’s total utilization. However with these new floor guidelines in place, the platform is now rising once more, going from 52 million DAU back in 2021 to 70 million right this moment.
And with ongoing updates to its advert instruments, Reddit’s now additionally trying to facilitate extra alternative for manufacturers to attach with its engaged, educated userbase.
However within the present market, the precise worth of Reddit will probably be troublesome to evaluate, particularly contemplating the place the most recent developments are headed.
Considered one of which, after all, is AI, which Reddit additionally thinks it holds important worth in.
Final 12 months, Reddit additionally increased the cost of its API access on account of many LLMs sourcing their conversational information from Reddit communities.
Might that be one other space of alternative for the app, in monetizing its information for future AI developments? Might Reddit possibly create its personal LLM based mostly on the identical?
It does seem to be Reddit might want to do one thing extra to drive up its worth, and an AI play would lean extra into rising market shifts.
However proper now, Reddit isn’t price $15 billion.
We’ll see what valuation Reddit chooses to go together with within the subsequent couple of months. Reddit will reportedly search to promote round 10% of its shares within the preliminary providing.
