Reddit Files to Go Public

Reddit Inc. announced on December 15, 2021, that it is confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”) relating to the proposed initial public offering of its common stock.

The number of shares to be offered and the price range for the proposed offering have not yet been determined. The initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions.

We are in a quiet period, and for regulatory reasons, we cannot say anything further.

The Wall Street Journal reported: “Reddit has been looking to build on the attention it gained at the start of the year its WallStreetBets forum became a hot spot for the individual investors who rallied around GameStop Corp. and other stocks.”

According to The Wall Street Journal, Reddit was sold to Condé Nast in 2006, and the magazine publisher’s parent, Advance Publications Inc., spun Reddit off in 2011 and remains a shareholder. The New York Times reported that Reddit raised more than $1 billion in private capital from investors including Fidelity Management, Advance Publications, Sequoia Capital and Andreessen Horowitz.

The U.S. Securities and Exchange Commission (SEC) has plenty of information about the reasons why a company might decide to go public. One reason, of course, is to raise capital and potentially broaden opportunities for future access to capital.

The SEC also pointed out that a company that goes public “will take on significant new obligations, such as filing SEC reports an keeping shareholders and the market informed about the company’s business operations, financial condition, and management, which will take a significant amount of time for your company’s management and result in additional costs”.

In my opinion, a company that goes public will be forever beholden to its shareholders. It is possible for shareholders to become angry if they aren’t making enough money with Reddit’s stock. Boards could push for changes that the current users of Reddit might not agree with.