Reddit files for IPO earlier today. The company generated $804M of revenue in 2014, a 20% increase from $666.7M of revenue in 2022. It is reported that Reddit recently signed a $60M content licensing deal with Google for AI training. Content licensing is likely to become a new source of revenue and could potentially generate hundreds of millions dollars of revenue for Reddit. Reddit is targeting a $5B valuation for its IPO, which is priced at roughly 7X of its 2023 revenue. Reddit has not turned a profit yet but it’s growing at a decent rate so I think the $5B valuation is not unreasonable. Its 2021 valuation was $10B so this would be a 50% haircut but it’s not bad at all compared to the SPACs and frothy IPOs back in 2021.
I am a tiny Reddit shareholder since 2014 so this is great news for me ;-). It is not widely discussed but the biggest beneficiary of the Reddit IPO is the Newhouse family, owner of Conde Nast publishing empire (now called Advance Publications). Conde Nast bought Reddit in 2006 for ~$10M. From the S-1, it appears Advance still owns 34.5% of Reddit, which is worth $1.7B+ with the $5B valuation. That’s an amazing >100X return for the Newhouse family. WOW!