Reddit, a widely popular website globally, aims for a valuation of up to $6.4bn (£5bn) as it prepares to go public next week.
The company, which has yet to turn a profit, is planning to go public on the New York Stock Exchange.
An official document in the US disclosed that Reddit and its investors are looking to sell 22 million shares at a price range of $31 to $34 each.
However, there are concerns among many users that the change will significantly alter the website.
A portion of the shares will be set aside for select Reddit users and moderators.
The company is preparing for an initial public offering (IPO) that would allow some of its shares to be purchased by the public for the first time.
Our users feel a strong sense of ownership over the communities they establish on Reddit,” stated co-founder Steve Huffman in a letter to potential investors that was recently made public.
We aim for our users to truly feel like they are our owners by reflecting a sense of ownership in reality. Going public enables this to happen.
Reddit, established nearly two decades ago, serves as an online platform where individuals can share inquiries and engage in discussions about subjects that intrigue them.
The majority of the company’s revenue comes from advertising on the platform. Recently, they reached an agreement with Google that permits the tech giant to utilize Reddit data for training its artificial intelligence (AI) models.
Reddit has experienced financial losses every year since its inception, with over $90 million lost last year.
The valuation is significantly lower than the $10bn it was valued at during a private fundraising round in 2021.
At this time, the principal shareholders include Advance Magazine Publishers, a media company, Tencent, a Chinese technology company, Fidelity, an American investment firm, and Sam Altman, the CEO of OpenAI, the developer of ChatGPT.
Websites Built on Users
Reddit, established in 2005, offers a unique experience in contrast to other social media platforms like Facebook or TikTok.
Users typically feel more comfortable expressing themselves, even though subreddits are monitored by moderators.
Reddit communities have demonstrated their influence through instances like the Gamestop saga in 2021, when users banded together to increase the share price of the US video game retailer.
The shares, originally valued at $20, surged to a high of $350 following collaboration from Redditors.
Some users are concerned that the IPO could negatively impact the site.
“The product always suffers when the focus shifts from users to shareholders, who are the most important customers,” commented an individual.
“The primary objective is to prioritize generating an extra point of revenue during this quarter, rather than enhancing the quality of the product.”
