Reddit’s long on-again, off-again plans to go public might be on yet again.
Bloomberg reports that the social media giant has once more begun holding talks with potential investors, with optimism rising about a possible window for public debuts. A Reddit IPO could come as early as the first quarter of 2024, Bloomberg reports.
Reddit is reportedly considering a valuation as high as $15 billion.
A lot of the decision could hinge on the success of a pending IPO from Shein. That fast-fashion company made its filing confidentially Monday, with its last valuation standing at $66 billion, though that figure could have changed. The company could debut on the public markets in early 2024.
Reddit has been one of the leading IPO candidates for two years now, but has remained on the sidelines as the market has not been conducive to big public debuts. Last year was the worst in a decade for IPOs, and 2023 is likely to be just a tiny bit better.
Much heralded IPOs from Instacart and Klaviyo, which many thought would signal the resurrection of the public offering market earlier this year, started strong, but both companies are now trading 10-15% below their first trade price. That halted plans by many would-be public companies to make their own debut.
“[Instacart and Klaviyo’s] poor post-IPO performance has dashed the hope of an immediate rebound in the IPO market for VC-backed companies,” said Kyle Stanford, lead venture capital analyst at PitchBook, earlier this month.
Hints from the Federal Reserve that interest rate hikes might be done and interest rate cuts are a possibility for 2024 has started investors buzzing again. And Shein’s pending debut has only increased excitement.
Reddit filed for an IPO in December 2021 and was expected to go public in March with a valuation of up to $15 billion—but then the market chop began. Fidelity cut the estimated value of its shares in the company by one-third in May and the great wait was extended. (Fidelity backed off the dire notes the following month, increasing the estimated value of its shares by 6.5%.)
Since then, Reddit certainly seemed to be making moves to become more attractive to investors. In June, Reddit announced it would begin enforcing data rate limits on the free access tier of its application programming interface (API), a tool that powered popular third-party services that gave users an alternate way to browse Reddit’s forums.
That sparked a revolt among moderators and some users, but the revolt was short-lived and virtually all of the 8,4000 subreddit forums that went dark to protest the move, which resulted in charges for those third-parties, have been back up and running for a long period.
Just as importantly for the company, many users have moved over to the official Reddit app, which allows the company to profit from them by serving ads among forum feeds.
And CEO Steve Huffman, who many thought would be forced to step down at the start of the protests, is now more powerful than ever. Last month, the Washington Post reported Reddit was considering blocking search crawlers from Google and Bing, as the companies bickered over the use of Reddit data to train generative AI—and what compensation Reddit should receive.
Reddit said nothing is changing at present, but did not deny it might block crawlers down the road.
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