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Reddit reveals its finances, in a big step towards its IPO| GuyWhoKnowsThings

Reddit, the community-focused message board, took a significant step Thursday toward going public, paving the way to become the first major social media company in stock market debut in years and a test for private companies after a drought in initial public offerings.

in a offer prospectus, Reddit revealed its financial performance in preparation for selling shares to investors. The San Francisco-based company reported that its revenue rose more than 20 percent as its losses narrowed last year and that it had 73 million daily users.

The prospectus begins a process in the stock market, in which the 19-year-old company will meet with potential investors to whet their appetite to purchase its shares. Reddit could be listed on the New York Stock Exchange in a matter of weeks. the company was valued at more than 10 billion dollars in private financing 2021.

Reddit is the latest in an older generation of social media companies to take aim at the stock market, following Facebook's high-profile offering in 2012Twitter is in fashion 2013 and Snap is in 2017. In the years since then, the social media industry has changed and faces scrutiny for misinformation, hate speech and other effects. Some of the companies have changed addresses; Facebook was renamed Meta and Twitter was purchased by Elon Muskwho privatized the company in 2022 and renamed it X.

Reddit's move is also highly anticipated after a lull in initial public offerings. Only 108 companies went public in the United States last year, about a quarter of those that debuted in 2021, according to data compiled by Renaissance Capital. Some of last year's biggest tech deals were Arm, a chip designerand instacarta grocery delivery company.

“We are going public to advance our mission and become a stronger company,” Reddit CEO Steve Huffman said in a founder letter included in the prospectus. “We hope that going public will also provide significant benefits to our community.”

In its prospectus, Reddit said revenue in 2023 was $804 million, up about 21 percent from $666 million a year earlier. The company lost $90 million in 2023, compared with a loss of $158 million the year before, according to the prospectus.

Reddit's road to the public markets has been long and difficult. Founded in a University of Virginia dorm in 2005 by Huffman and Alexis Ohanian, the site began as a destination for anonymous users to meet and discuss anything from popular television shows to guitars, makeup, and power washing machines.

Reddit was unique because it largely focused on tight-knit, mostly anonymous communities, all moderated by volunteers who self-governed their forums, or “subreddits,” based on rules they themselves had created.

The company raised hundreds of millions of dollars in funding over the years, including $250 million and more than 410 million dollars in two funding rounds in 2021. Investors include Fidelity Investments, Andreessen Horowitz, Sequoia Capital and Tencent Holdings.

Like other early social media efforts, Reddit initially avoided offering advertising and making money. Instead, it focused on forms of income that arose from community ideas, such as a user-generated e-commerce system and prizes that users could purchase from each other. Those ideas are still in play.

Reddit finally adopted advertising based on its topic communities. Brands like Laneige, for example, directed ads to a forum called Makeup Addiction, one of the most active subreddits, where users discuss cosmetics and how to apply them.

The site has also created an emerging data licensing business based on its huge corpus of conversation data, which has become increasingly important amid the artificial intelligence frenzy. AI models are trained with large amounts of such data so that they can become more powerful. On Thursday, Reddit announced a licensing deal with Google, which has used Reddit data to train and build its artificial intelligence systems.

The site has had its share of struggles. He faced controversy after controversy for his refusal to moderate communities in his early years, including his role in spreading misinformation during the Boston Marathon bombing in 2013and hosting racist and misogynistic content on some of its smaller subreddits. Last year, Reddit faced a user revolt after changing some of its rules and restricting third-party developers from using the site's content without paying for it.

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