What Happened to the Reddit IPO?
It was all over the place rumor-wise, and now there's radio silence.
On the 15th of December 2021 they filed with the SEC in the build up to IPOing, at that time the rumours were they'd be looking for a $15Bn valuation. At that time, SNAP was worth about 60Bn, TWTR 40Bn (a notoriously shitty stock), Facebook 900Bn. SNAP is down about 60% since then, Meta is down 75%, and TWTR is out of whack because of the acquisition. So basically they missed their chance. They could IPO today, but they'd be selling reddit very cheap, and they'd also be putting it under huge pressure since every other social media company is in the process of doing a huge round of layoffs so reddit would immediately need to start looking at their cost structure.
There's a couple reasons why it's so bad. Firstly, everyone's expecting a recession, so advertising budgets are getting cut and that's going to tank Reddit's revenue stream (which is already weak) and secondly, a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value. It's also just in a bad place narratively, none of the small scale social media sites are doing well revenue wise, and Tiktok is eating their lunches anyway.
Reddit UI slowly converged to the digg UI that killed it.
I use old.reddit.com
The newer UI is just so much bloat.
Bring back IRC style UIs that are data rich and don’t have a million pixels of white padding cause some UX graduate thinks it looks cool.
You could say the same thing about a lot of companies that were allegedly on the edge of IPO. Lots of IPOs got shelved due to the bad market conditions
Whether due to bad timing in the market or general hubris, Reddit won't sell until it reaches the likes of Yahoo and the Ruperts of the world. Every day they look more and more like Digg v4, their own raison d'être
They couldn’t coerce enough people to install the app.
I never did understand how Reddit could realistically remain the site it was after IPO. All the 18+ subs would have certainly vanished, and the fact they are now quarantining is the first step in the process. They've also tried to start paying moderators by making them curators, and that fell apart due to controversy. Is Reddit competently managed enough to merit an IPO?
Reddit were expected to go public in March. Russia shat the bed in February.
In addition to the market turn, the IPO was a bit of an odd choice to begin with. Conde Nast, a large media company, owns Reddit and treats it like a media distribution channel, not a rocket-ship tech company. They were never IPOing to grow - it was basically Conde Nast saying "we think this is the best price we're ever gonna get for this asset."
The IPO goes away when the independent cash value of the company dropped below the business value of the distribution channel.
It would be fiscal malpractice to IPO right now if you have the cash to wait out market weakness. Practically no healthy companies are going to try until mid-2023 at least.
A lot of companies that otherwise weren't going to IPO saw the opportunity to IPO and a marge larger multiple than they should have. That opportunity went away, so many of them also backed off. I worked at a company that was in this same position, and backed off. It's hard to consider IPO when both valuation multiples and your fundamentals have worsened.
I hate to say it, but I'd love for Reddit to be replaced by something better. Reddit is a sewer of negativity.
Looking forward to v2, whatever that is.
I've heard anecdotally that they are swimming in cash, so maybe that doesn't add urgency to an IPO before the economy picks back up.
Anecdotally, now is not a good time to be doing an IPO if you can help it. My company was also thinking about an IPO and is now delaying. I imagine they're waiting for market conditions to be better
The stock market started declining.