Reddit’s intended IPO has faced significant backlash from its users, concerned that heightened moderation and a push for monetization might compromise the platform’s community-centric values.
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An important step toward Reddit’s goal of becoming a publicly traded company is the social media platform’s filing of documents for an IPO. In 2023, Reddit’s revenue increased, but it is still not profitable. Due to recent moderation and product changes, Reddit’s vocal user base has also expressed widespread skepticism about the company’s ability to maintain user trust after the IPO and its future direction.
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Reddit IPO is filed
Reddit filed the necessary documents for an initial public offering with the Securities and Exchange Commission on Friday, marking a major step toward the company’s eventual public listing. The social media company announced revenue growth in 2023, with sales jumping from $666.7 million to over $800 million. Reddit continues to be unprofitable despite the rise in revenue; in 2023, the platform reported a $90.8 million net loss. Even though it’s still a loss, this is better than the company’s 2022 net loss of $158.6 million.
Reddit intends to reserve shares for 75,000 of its most active users as part of its IPO, a move that will directly involve its devoted online community in the public listing. The filing document outlines Reddit’s difficulties in developing an advertising business model that can rival that of internet behemoths like Google (NASDAQ: GOOG) and Meta (NASDAQ: META). Despite drawing more than 50 million users a day, Reddit has had difficulty profiting from its active user base.
The first “major” public offering in the tech industry this year is thought to have been Reddit’s IPO. Though the exact date is still unknown, the company is anticipated to list as early as March on the New York Stock Exchange under the ticker symbol “RDDT.” The offering this year will be closely examined to reveal more general trends in the tech sector.
Reddit IPO Fails to Stir Enthusiasm Among Users
Following the company’s IPO filing, Reddit users have been overwhelmingly negative in their sentiments, criticizing the platform’s direction and expressing deep skepticism about the platform’s potential success as a public company.
Predictions that content moderation would rise following the IPO were the subject of many comments in a recent /r/stocks thread. One such prediction was made by user FalseListen, who wrote, “Once they get rid of NSFW they will go down.” One user, static_motion, pointed out that co-founder Aaron Swartz was removed from Reddit’s founding narrative. Some others supported shorting Reddit stock, saying as plainly as possible that one should “short it to the point it delists.”
Another point of criticism raised by user ProfessorDerp22 was the possibility of increased advertising and paid subscriptions following the IPO. He wrote, “Get ready for an increase in Ads and a paid-subscription model.” Deals made by user NiceTo for AI training data with major tech companies like Google were cited as indicators of Reddit’s future course. Reddit’s business model is viewed negatively in the majority of comments, and it is unclear how the site will be able to sustain user engagement and trust after going public.
This is not the first time users of the platform have voiced disapproval of decisions made by the business. Reddit moderators and users staged protests against changes last year that resulted in the shutdown of multiple third-party applications. Additionally, the business tested a blockchain-based “internet points” system, which was discontinued in October 2023.
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