(BFM Bourse) – The community site, known for its discussion forums which have become the preferred destination for “day traders” since the emergence of “meme stocks” at the beginning of last June, is preparing to enter Wall Street and aims more $ 15 billion according to Reuters.
Will Reddit itself become a “meme stock” that aficionados will debate on a dedicated “sub-reddit”? This is not to be excluded since the community site which has 52 million daily active users is heading to the Stock Exchange, after having already made so much talk about it on the markets this year.
The social network announced Wednesday evening in a brief statement “to have confidentially submitted a draft registration statement (…) to the SEC concerning an initial public offering of its ordinary shares”. The number of shares to offer as well as the price range have not yet been determined, and the public offering will take place when the SEC completes its review process, subject to market conditions, Reddit soberly says.
Created in 2005 by three students (Steve Huffman, Alexis Ohanian and Aaron Swartz) from Virginia, the discussion platform was bought in October 2006 by Condé Nast (which publishes the magazines Vogue, The New Yorker and Vanity Fair) for a sum of between $ 10 million and $ 20 million, before becoming an independent subsidiary in 2011.
$ 700 million raised this summer
Last August, Reddit announced that it had raised $ 700 million in a fundraising campaign led by Fidelity Management and valuing the network at more than $ 10 billion. This was the group’s 8th fundraising since its first of 100,000 euros in 2005, for a total global amount raised of $ 1.3 billion. Personalities like Snoop Dogg, Jared Leto or even Peter Thiel had participated in the first major roundtable led by the group in September 2014 (for 50 million). Reuters reported in September that the company would aim for a valuation above $ 15 billion upon completion of its IPO.
The site, via its more than 100,000 forums (or “sub-reddits”), allows members of a community to meet around their favorite subject with rules established by moderators and a voting system (Upvotes / Downvotes) bringing up the most popular comments. It is supported by online advertising and paid subscriptions to Reddit Premium providing access to “Lounge”, a restricted subreddit, as well as more user interface functionality for $ 6 per month.
In particular popularized by Barack Obama who had answered user questions during an “AMA” (for “Ask me anything”) as part of his presidential campaign in 2012, which had made the site temporarily unavailable due to of the traffic generated, the site has since seen its influence grow, and extend to the financial markets. He took advantage of the influx of private investors into the markets during the first lockdowns of 2020, these neo-stock marketers coming to seek and exchange advice on the now famous “WallStreetBets” subreddit.
Frenzy around “meme stocks”
Coalition on this forum, hundreds of thousands of private investors have shaken Wall Street by causing the surge of certain titles such as that of the video game distributor GameStop in January 2021, then that of the chain of cinemas AMC Entertainment in June. The frenzy around these titles since baptized “meme stocks” has also been fueled by the emergence of Robinhood-type neo-brokers, whose title has itself become a “meme stock”. And if this frenzy has dissipated somewhat since, the phenomenon has shown that when the culture of the Internet meets that of finance, the mixture can be explosive.
Reddit, headquartered in San Francisco since 2006, took advantage of this influx of new members to cross the $ 100 million mark in ad revenue in Q2 2021, nearly three times more than a year earlier.
Quentin Soubranne – © 2021 BFM Bourse