Social media platform Reddit is reportedly eyeing an initial public offering (IPO) as early as the first quarter of 2024. Potential investors are advising Reddit to target a valuation of at least $5 billion, according to Bloomberg. The success of the IPO will depend on the state of the IPO market, which has faced challenges in recent years. Reddit's current valuation in private markets is estimated to be below the $5 billion figure. In late 2021, when Reddit first started preparing for its IPO, there were expectations that the company could be valued as high as $15 billion.
Investors are hopeful that 2024 will be a more active year for the IPO market. Last year saw the resurgence of IPOs with profitable tech startups such as Instacart and Klaviyo filing to go public. The Federal Reserve's promised rate cuts and a weak mergers and acquisitions market may also contribute to a more favorable IPO market in 2024. The last social media company to go public was Pinterest in 2019, with a valuation of $10 billion.
Reddit's current target valuation suggests a departure from the sky-high valuations seen in the past. The company declined to comment further on the matter. Reddit, often referred to as "the front page of the internet," was launched in 2005 by Steve Huffman, Alexis Ohanian, and Aaron Swartz. It quickly became one of the largest sites in the world in terms of unique visitors and was later sold to Condé Nast for $10 million. Huffman has been the CEO since 2015 and has witnessed significant growth, particularly during the pandemic when Reddit gained popularity through the meme-stock craze. Huffman himself has expressed surprise at Reddit's remarkable journey, describing it as a "homework assignment that got out of hand."
Overall, the anticipation for Reddit's IPO is growing, with potential investors advising the company to target a valuation of at least $5 billion. The success of the IPO will depend on market conditions, but investors are hopeful for a more active IPO market in 2024.