The online platform Reddit is taking the next step towards its stock exchange debut.
The San Francisco-based company published its share prospectus on Thursday, two years after initially filing confidentially with the US Securities and Exchange Commission (SEC). The prospectus reveals that Reddit was able to increase its turnover and reduce its losses last year.
Reddit allows users to join online groups according to their interests. In the past quarter, the platform had an average of 73.1 million users per day. Around half of these came from the US. Registered US users reportedly spent an average of 25 to 30 minutes a day on Reddit.
The service emphasizes to prospective advertisers that many of those users cannot be found on other online services. For example, almost a third of Reddit's US users are not active on Facebook, 73% are not on Snapchat and 53% are not on Elon Musk's Twitter successor X.
Reddit will also give some of its particularly active members - some users and moderators of Reddit's online groups - the opportunity to buy shares in the initial public offering (IPO). Unlike many other investors, there will be no obligation for them to hold their shares for a certain period of time before selling them.
The shares will be allocated according to the so-called "karma" rating, which reflects the reputation and activity of users on the platform.
In the current version of the IPO prospectus, there was no indication of what proportion of the shares available for sale will go to users.
In the usual risk warnings in the prospectus, Reddit also stated that user participation could lead to major price fluctuations after the IPO.
Users on the platform formed a movement in 2021 that invested in shares of companies such as the video game retail chain Gamestop, which were struggling to build faith on Wall Street. Their investment was instrumental in bringing share prices up.
Reddit increased its turnover last year from $666.7 million to $804 million. Losses fell from $158.6 million to $90.8 million.
Reddit has not initially provided any information on their targeted valuation or the volume of the share offering. According to information from the financial service Bloomberg, Reddit was recommended a valuation of around $5 billion.
