Maybe speculative IPO investing isn’t exactly what the market needs right now, but what’s going on with the Reddit IPO?
It was expected to be just around the corner.
This article was originally written by MyWallSt. Read more insights from the MyWallSt team here.
Return of the meme
Likely, the social media giant is waiting for the water to settle before jumping in. Sources reported Reddit is seeking a $15bn valuation when it finally does arrive, a steep ask in the current environment where investors have lost their tolerance for tech and innovation.
Given that it’s being advised by two of the largest investment banks in the world, Morgan Stanley and Goldman Sachs, it’ll have a close advisory on the right capital-raise strategy before diving in. Reddit received $700m in a private funding round just last September at a $10bn valuation too, so there’s really no rush.
But, the IPO is somewhere on the horizon, so how does Reddit stack up?
The company has 330 million monthly active users, 15 million daily active users and a 45/55 split between US and international audiences. It makes money from three segments: advertising, subscriptions and awards/virtual currency purchases.
While average revenue per user is estimated to still be quite low compared to competitors — estimated at $0.30 versus Meta Platforms’ [FB] $7.89 — advertising revenue grew 200% to $100m in Reddit’s second quarter last year.
Whether it’s r/investing, r/woodkworking or r/birdsarentreal, there’s a subreddit for everyone, and in this, it created a platform that users love. It has little to no censorship constraints and doesn’t track user data either, meaning the company probably hasn’t seen revenue beaten down too much as a result of privacy updates from tech giants.
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