Reddit Finally Files for IPO, But its Users Aren’t Thrilled

Reddit has filed paperwork for an initial public offering, a significant milestone for the social media platform as it seeks to become a publicly traded company. Despite revenue growth in 2023, Reddit remains unprofitable. The planned IPO has also been met with widespread skepticism by Reddit’s vocal userbase, who have expressed concerns about the company’s future direction and ability to maintain user trust post-IPO based on recent moderation and product changes.

Reddit Files for IPO

Reddit has taken a significant step toward becoming a publicly traded company, filing paperwork with the Securities and Exchange Commission on Friday for an initial public offering. The social media firm reported revenue growth in 2023, with sales rising to over $800 million from $666.7 million the prior year. Despite the increase in revenue, Reddit remains unprofitable, posting a net loss of $90.8 million in 2023. While still in the red, this marks an improvement from the company’s $158.6 million net loss in 2022.

As part of its IPO, Reddit plans to reserve shares for 75,000 of its most active users, an effort to involve its loyal online community directly in the public listing. The filing document highlights Reddit’s challenges in building an advertising model capable of competing against tech giants like Google (NASDAQ: GOOG) and Meta (NASDAQ: META). While the platform attracts over 50 million daily users, Reddit has struggled to monetize its engaged user base effectively.

Reddit’s IPO is considered the first “major” public offering in the tech sector this year. The company is expected to list on the New York Stock Exchange under the ticker symbol “RDDT” as early as March, though the timing remains fluid. This year, the offering will be closely watched to indicate broader tech industry trends.

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Users Not Excited About Reddit IPO

Sentiment on Reddit following the company’s IPO filing has been overwhelmingly negative, with users criticizing the direction of the platform and expressing deep skepticism about its future success as a public company.

Many comments in a recent /r/stocks thread focused on predictions that content moderation would increase after the IPO, like user FalseListen predicting: “Once they get rid of NSFW they will go down.” The erasure of co-founder Aaron Swartz from Reddit’s origin story was called out by user static_motion. Others advocated shorting Reddit stock, with user zatonik bluntly stating: “short it to the point it delists.”

Criticism also centered on the potential for more advertising and paid subscriptions post-IPO, with user ProfessorDerp22 writing: “Get ready for an increase in Ads and a paid-subscription model.” Deals with tech giants like Google for AI training data, highlighted by user NiceTo, were cited as signals of Reddit’s future direction. Overall, comments reflect overwhelmingly pessimistic views on Reddit’s business model and skepticism about how it can maintain user trust and engagement after going public.

This would not be the first time users of the platform have expressed negative opinions on moves made by the company. Last year, Reddit mods and users protested against changes that forced several third-party applications to shut down. The company also experimented with a blockchain-based “internet points” system, which was sunsetted in Oct 2023

Can Reddit be this year’s first big, successful tech IPO? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.