As Reddit prepares to go public next week, the social media giant is eyeing a valuation of up to $6.4 billion, according to a filing with the US Securities and Exchange Commission (SEC). Despite its popularity as one of the world's most visited websites, Reddit has yet to turn a profit.
The company, which will list its shares on the New York Stock Exchange, plans to offer 22 million shares at a price range of $31 to $34 each. While Reddit hopes to attract investors, many users are expressing concerns about the potential impact of the IPO on the platform's culture.
A letter to prospective investors from co-founder Steve Huffman emphasized Reddit's commitment to its user community, stating, "Our users have a deep sense of ownership over the communities they create on Reddit. We want this sense of ownership to be reflected in real ownership - for our users to be our owners. Becoming a public company makes this possible."
Founded nearly two decades ago, Reddit serves as an online forum where users can engage in discussions and share content on various topics. The platform generates revenue primarily through advertising, but also recently entered into a data-sharing agreement with Google for AI training purposes.
Despite its popularity, Reddit has yet to achieve profitability, reporting losses each year since its inception. Additionally, the company's anticipated valuation falls short of its $10 billion valuation in a private fundraising round in 2021.
Key stakeholders in Reddit include media company Advance Magazine Publishers, Chinese tech firm Tencent, US investment firm Fidelity, and Sam Altman, CEO of OpenAI, the organization behind ChatGPT.
Known for its user-driven content and community-driven approach, Reddit differs from traditional social media platforms like Facebook or TikTok. However, concerns linger among users about the potential consequences of the IPO on Reddit's culture and user experience.
While Reddit's IPO presents an opportunity for growth and expansion, some users fear that prioritizing shareholder interests over user needs may compromise the platform's unique identity and user-centric focus.
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