Reddit (RDDT) IPO is one of the most eagerly awaited initial public offerings of 2024. Reddit is ready to hit the road and go public with its IPO offering most likely on Thurssday, March 21.

Reddit, Inc. (Reddit), a community of communities, announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to a proposed initial public offering of its Class A common stock.

Here are ten things for investors to know about Reddit IPO and the company’s financials.

  1. Reddit has evolved to become one of the internet’s largest corpuses of information, with over one billion posts and over 16 billion comments through December 31, 2023, and was among the top ten most-visited sites in the United States in December 2023, according to Similarweb. Search is already a key action taken on Reddit with an average of over 35 million daily search queries directly on Reddit in December 2023.
  2. Reddit has over 100,000 active communities. In December 2023, more than 500 million visitors, and in the three months ended December 31, 2023, an average of 73.1 million daily active uniques (DAUq) were recorded by the company.
  3. Communities on Reddit are organized based on specific interests and are called subreddits. Within subreddits, Redditors engage in active and in-depth conversations by sharing experiences, submitting links, uploading images and videos, and replying to one another in comment threads on any topic.
  4. After the completion of this IPO offering, the voting agreement will be between Advance Magazine Publishers Inc., the principal stockholder, and Steven Huffman, Chief Executive Officer and President and a member of our board of directors.
  5. Reddit has informed the US SEC that as they are an ’emerging growth company’ as defined under the U.S. federal securities laws and, therefore, may elect to comply with certain reduced public company reporting requirements for this and future filings.
  6. During the three months ended December 31, 2023, approximately 50% of Redditors visited the platform from outside of the United States. In the three months ended December 31, 2023, over 90% of all Reddit posts were made in English.
  7. In December 2023, the average active minutes on Reddit per logged-in user in the United States was between 25 and 30 minutes per day, and there was an average of 73.1 million DAUq during the three months ended December 31, 2023. During this period, approximately 50% of DAUq were from the United States, and the remainder were from the rest of the world.
  8. Of people who visited Reddit in the United States, 32% were not active on Facebook, 37% were not active on Instagram, 73% were not active on Snapchat, 41% were not active on TikTok, and 53% were not active on X.
  9. Reddit’s revenue for the years ended December 31, 2022 and 2023 was $666.7 million and $804.0 million, respectively, representing growth of 21%. Reddit’s gross margin for the years ended December 31, 2022 and 2023 was 84% and 86%, respectively.
  10. Reddit’s net loss for the years ended December 31, 2022 and 2023 was $(158.6) million and $(90.8) million, respectively. Reddit’s Adjusted EBITDA for the years ended December 31, 2022 and 2023 was $(108.4) million and $(69.3) million, respectively. Reddit acknowledges that it has a history of net losses and they may not be able to achieve or maintain profitability in the future.

Risks Related to Business

Investing in Reddit’s Class A common stock involves risks and investors should read the ‘Risk Factors’ before investing in them. Some of the risk factors highlighted by the company are –

If we fail to increase or retain our user base, and in particular, our DAUq, or if user engagement declines, our business, results of operations, financial condition, and prospects will be harmed.

If Redditors do not continue to contribute content or their contributions are not valuable or appealing to other Redditors, we may experience a decline in the number of Redditors accessing our products and services and in user engagement, which could result in the loss of advertisers and may harm our reputation, business, results of operations, financial condition, and prospects.

Changes in internet search engine algorithms and dynamics could have a negative impact on traffic for our website and, ultimately, our business, results of operations, financial condition, and prospects.

A word of caution from the company in its IPO note to US SEC – “Our results of operations may fluctuate from quarter to quarter, which makes them difficult to predict. We are in the early stages of monetizing our business and there is no assurance we will be able to scale our business for future growth.”