Reddit was
valued at $10 billion in a private fundraising round last month. By the time
the IPO takes place early next year, Reddit hopes it will be valued at more
than $15 billion, one of the sources said.
The sources
cautioned that the timing and size of the IPO were subject to market conditions
and asked not to be identified because the preparations are confidential. A
Reddit spokesperson declined to comment.
Reddit's
move to hire advisers for its IPO was previously unreported. In a recent
interview with the New York Times, Chief Executive Steve Huffman had said the
company was planning to go public but had not decided on the timing.
Reddit was
founded in 2005 by Huffman and entrepreneur Alexis Ohanian. It became known for
its niche discussion groups, lagging the popularity of other major social media
platforms such as Facebook and Twitter.
The San Francisco-based company saw explosive growth,
however, as a result of retail investors flocking to its message boards at the
start of the year for tips on trading GameStop and other meme stocks. Most Wall
Street analysts deemed the meme stocks as massively overvalued.
Reddit had roughly 52 million daily active users and over
100,000 communities, or "sub-reddits," as of October last year.
Huffman has said it gained millions of new users earlier this year during the
height of the trading frenzy, but more recent user figures have not yet been
released.
The company makes most of its money through advertising. It
reported $100 million in advertising revenue in the second quarter, an almost
threefold jump from the same period last year.
Reddit's biggest investors include Fidelity Investments,
Andreessen Horowitz, Sequoia Capital, and Tencent Holdings.
Online brokerage Robinhood Markets, whose trading app also
became popular with retail investors, capitalized on the meme stock frenzy by
launching an IPO in July. Robinhood itself became a meme stock on Reddit, and
its shares have risen roughly 28 percent since its stock market debut. ©
Reuters
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