• by Colin Kirkland , December 26, 2023

Reddit, the social news and discussion platform, has been a leading IPO (initial public offering) candidate for over two years, with rumors circulating about potential investors and plans to go public as early as the first quarter of 2024.

But according to a new report by The Information, the app's underperforming advertising revenue might hold the company back.

Reddit first submitted a draft registration statement with the Securities and Exchange Commission to go public in December 2021, around the time the company landed a $410 million funding round led by Fidelity, valuing the company at around $10 billion.

The next month, Reddit considered a valuation of $15 billion, continuing confidently with its plans by getting Morgan Stanley and Goldman Sachs to work on the listing. However, in May 2023, Fidelity slashed its valuation of Reddit to $5.5 billion, after a difficult and controversial year for the platform.

The platform has also faced controversy over the past year, as Redditors continue to use the platform to spread misinformation and harass other users, while the company itself attracted mass protest from users when it announced plans to charge for its API, leading to beloved third-party apps to shut down.

Now, as the company reportedly rejuvenates its plans to go public, holding talks with potential investors, Reddit's ad revenue could pose an additional issue.

Overall, the company finished the year with a faster growth rate than other social-media apps like Snapchat and Pinterest, with ad revenue up more than 20%, translating to $800 million.

But the numbers fall short compared to Reddit's goals two years ago, when it announced that it would surpass $1 billion in ad revenue by 2023.

“Ad executives say one reason Reddit fell short was the weakness in the ad market starting early last year, when rising interest rates caused marketers to pull back,” The Information notes.