Reddit, the community-focused message board site, took a significant step on Thursday toward going public, paving the way for it to be the first major social media company to debut on the stock market in years and a test for private companies after a drought in initial public offerings.
In an offering prospectus, Reddit revealed its financial performance in preparation for selling shares to investors. The San Francisco-based company reported that its revenue rose more than 20 percent as its losses narrowed last year, and that it had 73 million daily users.
The prospectus kicks off a process to the stock market, with the 19-year-old company set to meet potential investors to whet their appetites for buying its shares. Reddit could go public on the New York Stock Exchange in a matter of weeks. The company was valued at more than $10 billion in a 2021 private financing.
Reddit is the last of an earlier generation of social media companies to aim for the stock market, after Facebook’s high-profile offering in 2012, Twitter’s in 2013 and Snap’s in 2017. In the years since, the social media industry has changed, facing scrutiny for misinformation, hate speech and other effects. Some of the companies have shifted directions; Facebook was renamed Meta, and Twitter was bought by Elon Musk, who took the company private in 2022 and renamed it X.
Reddit’s move is also highly anticipated after a lull in initial public offerings. Just 108 companies went public in the United States last year, roughly a quarter of the number that debuted in 2021, according to data compiled by Renaissance Capital. Some of the biggest tech offerings last year were Arm, a chip designer, and Instacart, a grocery delivery company.
“We are going public to advance our mission and become a stronger company,” Steve Huffman, Reddit’s chief executive, said in a founder’s letter included in the prospectus. “We hope going public will provide meaningful benefits to our community as well.”
In its prospectus, Reddit said revenue in 2023 was $804 million, up about 21 percent from $666 million a year earlier. The company lost $90 million in 2023, compared with a $158 million loss the year before, according to the prospectus.
Reddit’s path to the public markets has been long and rocky. Founded in a University of Virginia dorm room in 2005 by Mr. Huffman and Alexis Ohanian, the site began as a destination for anonymous users to come together and discuss anything from popular TV shows, to guitars, makeup and power washers.
Reddit was unique in that it largely focused on tight-knit communities, mostly anonymous, each of which was moderated by volunteers who self-governed their forums, or “subreddits,” based on rules of their own making.
The company raised hundreds of millions of dollars in funding over the years, including $250 million and more than $410 million in two financing rounds in 2021. Investors include Fidelity Investments, Andreessen Horowitz, Sequoia Capital and Tencent Holdings.
Like other early social networking efforts, Reddit initially eschewed advertising and making money. It instead focused on forms of revenue that came from community ideas, like a user-generated e-commerce system and awards that users could buy one another. Those ideas are still in play.
Reddit eventually embraced advertising based on its topic-focused communities. Brands like Laneige, for instance, targeted ads to a forum called Makeup Addiction, one of the most active subreddits in which users discuss cosmetics and how to apply them.
The site has also built an emerging data licensing business based on its enormous corpus of conversation data, which has become increasingly important amid a frenzy over artificial intelligence. A.I. models are trained on gobs of such data so that they can become more powerful. On Thursday, Reddit announced licensing deal with Google, which has used Reddit data to train and build its A.I. systems.
The site has had its share of struggles. It faced controversy after controversy over its refusal to moderate communities in its early years, including its role in spreading misinformation during the Boston Marathon bombing in 2013, and hosting racist and misogynistic content in some of its smaller subreddits. Last year, Reddit faced a user revolt after changing some of its rules and restricting third-party developers from using the site’s content without paying for it.
