Reddit, the popular social media platform, filed its Initial Public Offer (IPO) on Thursday as it prepares to debut on the U.S. stock market in March. The company revealed in its IPO filing that its net loss narrowed to $90.8 million in FY23 compared to a loss of $158.6 million in the same period last year. In addition, its revenues grew 21% year-over-year to $804 million.
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Moreover, Reddit had 73.1 million daily active users (DAUs) and 267.5 million weekly active users as of December 31, 2023. In a separate development, according to a Reuters report, Reddit has entered into a deal with tech giant Google (GOOGL) to make its content available for training large language models (LLM) used in AI. Reddit will receive $60 million every year as a result of this contract.
Reddit was founded in 2005 by Steve Huffman and entrepreneur Alexis Ohanian and was valued at $10 billion in a funding round in 2021. The IPO filing also showed that CEO Steven Huffman’s Class B common stock is contingent on Reddit reaching a market capitalization of $5 billion after its IPO.
The platform faces competition from TikTok and Facebook (NASDAQ:META) but has a loyal user base known for sparking meme-stock rallies. It is important to note that despite primarily relying on advertising for revenue and offering premium access, the company has yet to turn a profit.
Is IPO ETF a Good Investment?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on Renaissance IPO ETF (NYSEARCA:IPO) shares based on 49 Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 31.83% rally in its share price over the past year, the average IPO price target of $42.32 implies 13.04% upside potential.
