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.
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 $15 billion 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 $700 million in a private funding round just last September at a $10 billion 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 MAUs, 15 million DAUs, and a 45/55 split between U.S. and international audiences. It makes money from three segments:
Advertising
Subscriptions
Awards/virtual currency purchases
While average revenue per user is estimated to still be quite low compared to competitors -- estimated at $0.30 v.s. Meta's (Facebook) $7.89 -- advertising revenue grew 200% to $100 million 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.
Given the current news cycle, I wouldn't be surprised if Reddit usage is at all-time highs, and personally, I'll be watching like a hawk for updates on one of the most highly-anticipated IPOs of the year.
