Report: Reddit Achieved Profitability in Q4, Could Soon Unveil IPO

Reddit, social media, IPO

Reddit is reportedly preparing for a potential initial public offering (IPO) in the United States.

The social media company and its advisers are expected to unveil the public IPO filing as early as this month, and Reddit has been advised to consider a valuation of at least $5 billion for the IPO, Bloomberg reported Monday (Feb. 5), citing unnamed sources.

Reached by PYMNTS, a Reddit spokesperson declined to comment on the report.

The company confidentially filed with the U.S. Securities and Exchange Commission (SEC) more than two years ago, in December 2021.

The listing was subsequently postponed due to the absence of profitability at the time.

On Jan. 18, Reuters reported that Reddit aimed to go public in March. The social media company planned to make a public filing in late February, begin its investor roadshow in early March and complete its IPO later that month, according to that report.

As it prepares for the IPO, Reddit has told potential investors it recorded a 20% increase in revenue for the year 2023 compared to the previous year, according to Monday’s Bloomberg report. The company’s revenue exceeded $800 million in 2023, representing a 20% rise from the $666 million generated in 2022.

While Reddit has not yet achieved profitability for the full year, it did achieve a profit in the fourth quarter, the report said. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) showed a loss of approximately $69 million.

The IPO is being worked on by a group of 16 banks, with Morgan Stanley and Goldman Sachs Group leading the way, per the report. Notable banks involved in the deal include JPMorgan Chase & Co., Bank of America and Citigroup.

The timing of Reddit’s IPO could position it as one of the first significant technology IPOs of the quarter, according to the report. This is closely watched by the IPO market as a potential indicator of the market’s rebound from a lack of first-time share sales in recent years.

Founded in 2005, Reddit has grown to become a prominent social media platform with over 70 million daily active unique visitors as of October, the report said.