Jan 20, 2024
By: Nisha Kumari
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An initial public offering (IPO) is the procedure of offering shares of a private corporation to the public in a new stock issuance.
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Reddit marks the first IPO of a social media company since Pinterest's debut in 2019. It is also expected to receive intense competition from TikTok and Facebook.
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Reddit's IPO tests user enthusiasm for its stock market debut, as platform investors fueled "meme" stock rallies like GameStop & AMC in the past three years.
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While being widely recognized, Reddit has not achieved profitability, relying mainly on advertising and a $5.99 per month premium access subscription for revenue.
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Steve Huffman, Founder, Reddit acknowledged the company's losses attributing them to investments that in turn led to the delay in the launch of IPO.
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In an effort to increase revenue, Reddit unveiled intentions to demand charges on companies seeking access to its application programming interface (API).
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The decision to demand charges has sparked dissatisfaction among users who are dependent on third-party apps for Reddit access.
Image credit: Reddit