- Reddit plans public share sale
- Users express concerns, dissatisfaction
- Aims for financial growth, expansion
Users of Reddit have reacted negatively to the company’s announcement that it intends to sell shares to the general public.
Redditors, as they are known, have expressed their opinions with phrases such as “good while it lasted,” “the beginning of the end,” and “they’ve ruined it” since the announcement was made on Thursday.
According to the organisation, its strategies are “exciting” and will provide growth opportunities for the company.
Nevertheless, numerous users are concerned that the transition will cause a fundamental change to the website.
Since nearly two decades ago, Reddit has functioned as an online forum where individuals can post inquiries and provide commentary on subjects that pique their interest.
In December 2023, the website attracted an average of 76 million daily visitors, drawn by its recurring “ask me anything” threads. These threads featured a diverse range of participants, including former US president Barack Obama and anonymous ordinary citizens.
Some believe the initial public offering (IPO) filed with US regulators will alter the spirit of the website.
Individually, the product [suffers] whenever its most critical consumers transition from [users] to shareholders.
Rather than focusing on how to improve the product, the question shifts to “what can we do to squeeze out an extra point of revenue this quarter?”
Origins of dissent
It is not the first time that the most outspoken users of Reddit have voiced their discontent with the platform.
Thousands of Reddit communities became inaccessible in 2023 as a result of user protests over the site’s administration, specifically contentious accusations levelled against the creators of third-party applications that are used to navigate the site.
After dissatisfied users voted to restrict access to photos and videos of comedian John Oliver, some of the largest Reddit communities subsequently adopted the restriction.
However, this only lasted briefly, and Reddit’s strategy ultimately paid off financially, as the tech giant reportedly reached a $60 million (£47 million) agreement with Reddit to use its posts to train artificial intelligence tools.
The amount of capital the company hopes to raise through a listing on the New York Stock Exchange is not specified in the filing.
However, it offers insight into the company’s functioning, encompassing its challenges in converting its online appeal into financial gain.
Following a round of private fundraising in 2021, it attained a valuation of approximately $10 billion.
Since its inception, however, the company has incurred annual losses, including over $90 million last year.
Reddit stated in the filing that it had not begun making significant efforts to generate revenue until 2018. Its annual revenue was $804 million, an increase of over 20% from 2022.
Although advertising generated the majority of the revenue, CEO Steve Huffman expressed enthusiasm in a note to potential investors about the potential to transform the platform into a marketplace for merchandise and grant licences for its content to AI firms.
Mr. Huffman wrote, “I have never been more enthusiastic about the future of Reddit than I am at this moment.” There are numerous prospects for expanding both the platform and the business, with the latter being accomplished through advertising, monetising platform commerce, and data licensing.
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Since Pinterest in 2019, Reddit’s IPO would be the first of its kind by a social media company.
It occurs at a time when U.S. financial markets are consistently setting new records, propelled by optimism regarding the economy and a new wave of development fuelled by artificial intelligence.
