Reddit, the San Francisco social media site that describes itself as "the front page of the internet," filed for an initial public offering on Thursday, reflecting the tech company's aim of expanding its presence and profile.
The company filed to be listed in the coming weeks on the New York Stock Exchange under the ticker symbol "RDDT."
Founded in 2005 by Alexis Ohanian and his dorm mate at the University of Virginia, Steve Huffman, the site started as an gathering place for anonymous banter and commentary on culture and politics. Over the years, its userbase has grown, with now 76 million people visiting the site daily across more than 100,000 communities, according to its filing to regulators.
For years, Reddit has been the world's most popular message board where droves of volunteer moderators decide the rules of each community.
In a letter that accompanied its regulatory filing, Huffman, Reddit's CEO, said he hopes going public will benefit the site's community, along with investors. "Our users have a deep sense of ownership over the communities they create on Reddit," Huffman wrote.
Advance Publications, which owns Condé Nast, is Reddit's largest shareholder, Reddit's filing shows. The No. 2 shareholder is Chinese tech company Tencent. Sam Altman, the CEO of ChatGPT maker OpenAI, is Reddit's third-largest shareholder, according to the filing.
Altman's stake is more than double that of Huffman, Reddit's CEO.
Reserving shares for top users
In an unusual move, the company plans to allow top users, including moderators, the chance to purchase shares in its initial public offering, also known as an IPO. Typically, companies offer up stocks mostly to institutional investors during a stock market premiere.
The company also said it is setting aside stock to individual investors through brokerage apps like Robinhood. Which users are picked will be determined by their Reddit "karma," a term the site uses to determine a user's reputation on the platform.
"We will assign each eligible participant to a tier based on that participant's contributions to Reddit," the company wrote in its filing to regulators, which did not specify how many shares would be set aside for prolific Reddit users.
Reddit, led by co-founder and CEO Steve Huffman, is expected to launch its official roadshow pitch to investors next month, at which time it will announce at what price it hopes to sell stock.
In the crowded world of social media, Reddit has grown popular by amassing large, ardent followers to many of its so-called subreddits, or individual message boards, by allowing the communities to govern themselves.
This laissez-faire approach has proven divisive. Fans of unbridled free speech have cheered the lack of centralized rules and enforcement actions seen at rival platforms like Facebook, Instagram and TikTok. But critics have chided Reddit for allowing online communities to spring up with toxic material, including harassment, racism and the leaking of private celebrity photos.
Efforts have been underway to rein in the most noxious material on Reddit and establish clear guardrails for keeping out the most noxious content, but moderators still make most decisions about what can be posted to the site.
Reddit was at the center of the GameStop stock craze
Reddit became the center of a stock market firestorm when a subreddit known as WallStreetBets helped organize small investors to send the stock of videogame retailer GameStop soaring to extraordinary highs, an event that prompted a Wall Street trading frenzy and put the spotlight on Reddit's role in so-called meme stocks.
In recent months, Reddit has taken a number of controversial steps widely seen as preparing for a public offering, which it first indicated it had plans for in late 2021.
Among the changes was Reddit's decision to charge some developers for access to the site. The move sparked a boycott among thousands of Reddit communities angered that the change would kill off third-party apps many use to read and post on the site. Critics argued the policy shift was an attempt to move users toward Reddit's own app and away from third-party apps.
Another controversial announcement was made just before Reddit filed its paper work to go public. The company struck a licensing deal with Google in which data will be scraped across the site's thousands of communities to help train Google's artificial intelligence models.
"Reddit represents one of the largest data sets of just human beings talking about interesting things," Huffman told NPR in June. "We are not in the business of giving that away for free."
Reddit (along with peer social media platforms Facebook, Instagram, Snap, YouTube and others) has been dealing with a slowdown in digital ad spending. That, in turn, has pressured the companies to find new ways to generate revenue, something that became particularly pressing ahead of its IPO.
Analysts say investors will now be pushing the company to show how it can be profitable, which so far it has not done. In the last three months of last year, Reddit had net income of $18 million and net losses of about $90 million, according to its Thursday filing.
Back in June, Huffman told NPR that the ups and downs of the company through the years led to a reckoning.
"We're 18 years old," Huffman said in 2023. "I think it's time we grow up and behave like an adult company."
