By February of this year, discord seemingly remained. Some developers no longer believed that Reddit cared about users in the third-party app environment, questioning the company’s leadership that had decided to require most popular third-party apps to drastically change their business models just to survive on the platform.
When Reddit announced its plans to go public, the company was valued at about $10 billion, Reuters reported, but “valuations have swung since then,” the WSJ reported. Reddit is not considered profitable, Forbes reported last June, but some of Reddit’s third-party apps were—a tension that remains hard to reconcile between the company and many users. At the same time, Reddit’s IPO becoming a success appears to depend somewhat on Reddit remaining “very popular,” an industry analyst told Forbes, and any future unpopular moves the company might have planned that could be as impactful as changing its API access may risk user boycotts becoming “terminal.” If left unresolved, even Redditors not boycotting the platform and considering buying into the company may be dissuaded by this tension.
After years of delaying its IPO in pursuit of profitability ahead of its debut, Reddit’s first day of trading, expected as soon as March, may not be as splashy as Snap’s debut. A Forbes analyst, Peter Cohan, urged savvy investors to “not buy into an IPO on the first day of trading.”
“I would not buy Reddit stock on the day of the IPO since the price will be engineered by underwriters to rise significantly on the first day of trading,” Cohan wrote. “Instead, you should wait until after Reddit reports its first quarterly earnings as a public company.”
However, a Nasdaq post from financial analyst Surbhi Jain suggested that if Reddit’s IPO is a hit, it “could mark a turning point in the tech offering market, following a drought since Pinterest Inc’s debut in 2019,” possibly “kickstarting the market” for IPOs the way Snap’s debut did.
While Reddit has long hoped its users would share its enthusiasm in going public, Cohan’s piece also quoted Redditors griping about the IPO.
“Reddit is in the worst shape it’s ever been in and I’ve been on this goddamn website for like 17 years,” a user called huxtiblejones posted. “I have legitimately never felt so tired of it, so let down by it, so certain that the quality of virtually every community has diminished… and yet it’s making more money than ever? Yikes.”
Another user, fr0z3nph03n1x, joked that “Reddit killing the platform to [eke] out a nightmare IPO is gonna be hilarious.”
Advance Publications, which owns Ars Technica parent Condé Nast, is the largest shareholder of Reddit.