Reddit picks New York Stock Exchange for delayed initial public offering

Reddit is planning an initial public offering and the New York Stock Exchange won the listing, the Wall Street Journal has reported.

The San Francisco-based social media company confidentially filed offering paperwork with the US Securities and Exchange Commission in 2021, it had said in a blog post back then.

However, plans were put on hold amid a challenging business climate and aligning with the broader trend of delayed IPOs in the tech sector.

It is expected to unveil the filing as soon as later this month and will name NYSE as its exchange, according to the WSJ report.

The listing is a coup for the NYSE in its competition with Nasdaq for high-profile IPOs.

In 2023, the number of IPOs on US exchanges annually increased by 42 per cent, but IPO proceeds grew by more than 160 per cent, driven by several large high-profile listings, an EY report said in January. There were seven IPOs in 2023, which raised more than $500 million, compared with only four in 2022, it added. Technology and health care continued to lead the US IPO deal count. Across sectors, investor preferences have continued to gravitate towards companies with greater scale and profitability, EY reported.

“The market backdrop for IPOs has improved significantly over the past few quarters: valuations are up, volatility is down, inflation may be corralled, and interest rates could begin ticking down,” the consultancy said.

Four high-profile companies, including chip-designer Arm Holdings and German shoemaker Birkenstock, listed shares late last year.

This year has the potential to be more normal in terms of how much money is raised by IPOs. Major US stock indexes are trading at or near records.

One of the biggest offerings of 2024 could be fast fashion giant Shein, which filed confidentially for an IPO in November, according to WSJ.

However, the China-founded, Singapore-based company is navigating a minefield of US-China tensions, which could affect whether its listing occurs.

Another high-profile potential IPO this year could include digital payments platform Stripe.

Reddit is considering feedback from early meetings with potential investors in its IPO that it should consider a valuation of at least $5 billion, Bloomberg reported.

The online discussion platform has been looking to capitalise on the attention it gained when its WallStreetBets forum became a hot spot for individual investors who rallied around GameStop and other stocks.

Founded in 2005, Reddit has raised $1.3 billion from private investors so far, including support from Silicon Valley heavyweights such as Sequoia Capital and Andreessen Horowitz.

Fidelity led Reddit’s Series F raise in 2021, at a valuation close to $10 billion, although it later marked down the value of its holdings in the company by 41 per cent.

The company could potentially have been valued as much as $15 billion in an IPO then, Bloomberg reported in 2022.

Steve Huffman, chief executive and co-founder of Reddit, acknowledged in a discussion with users last year that the company had stalled its IPO plans to move closer to profitability.

Reddit had more than 70 million daily active unique visitors as of October, according to its website.

It became a darling of the so-called meme-stock era after a forum on the site, WallStreetBets, jolted the stock market.

The trading frenzy in 2021, driven largely by posts on the site, whipsawed the prices of GameStop and AMC Entertainment Holdings.