8 ms·

Ask HN: What Happened to the Reddit IPO?

55 points by boppo1 4y ago

It was all over the place rumor-wise, and now there's radio silence.

RickJWagner 4y ago
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.
pcbro141 4y ago
The stock market started declining.
jwithington 4y ago
the stock market https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/ipo-activity-fell-sharply-in-q3-as-stocks-dipped-recession-fears-climbed-72535953 https://www.spglobal.com/marketintelligence/en/news-insights...
aliqot 4y ago
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
- wincy 4y ago
  I’m sure it’s really helping their numbers having literally every single mobile page aggressively push you toward the mobile app with no way of disabling it.
  - id 4y ago
    I'm unironically sure it's helping their engagement numbers. Someone with the app installed on their phone is going to engage much more frequently.
    - itsoktocry 4y ago
      >Someone with the app installed on their phone is going to engage much more frequently This sounds like something management would claim, but how so? What's inherently more appealing or engaging about the app, especially when you're practically forcing people to use it?
      - luplex 4y ago
        you can send push notifications, and it's one fewer tap to get on reddit. I think the push notifications are the main benefit.
      - gardenhedge 4y ago
        Bored people open apps before they browse to URLs.
    - bthater 4y ago
      At least anecdotally this push was the final push I needed to stop using reddit. I went from probably browsing for a few hours a day to maybe once or twice a month when a friend links me a post.
- fullshark 4y ago
  Nah they are cultivating a growth story, and the markets will eat it up in a few years when they are desperate for growth stocks again. Even though it'll be 20 years old by that time. Maybe they won't get a 15 billion valuation or whatever but the early investors/conde nast will make a healthy profit. https://twitter.com/paulg/status/1360263618508521480 https://twitter.com/paulg/status/1360263618508521480
  - JumpCrisscross 4y ago
    > markets will eat it up in a few years when they are desperate for growth stocks again This requires low short-term and long-term rates for more than one fund cycle. That puts the IPO out, at a minimum, 5 to 7 years. It also puts it at odds with most near-term rates forecasts. If Reddit is waiting for peak valuations to go public, they'll be waiting for 10+ years or, more likely, be bought while running out of money, because waiting for multiples to change as a business strategy is a piss poor one.
    - fullshark 4y ago
      They don't need peak valuations, just a market that's not cowering in fear. It may even come within a year, I don't know their financials but they will find a window, maybe one where FB's social networks show clear weakness and they can sell a story as usupers of their market share. My guess is reddit is just trying to weather the storm to find that window and eventually it will come though maybe not satisfying their pre-recession fantasies.
      - JumpCrisscross 4y ago
        > don't need peak valuations, just a market that's not cowering in fear Present multiples do not convey this is a fearful market [1]. [1] https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe
        fullshark 4y ago
        So the claim is interest rates will never get low enough to make unprofitable social networks that are growing enticing IPOs again? Or at least for years? If that's the case I guess private acquisition is another way out, but I think kicking the can down the road and waiting for sentiment to change makes sense. No doubt interest rates play a role in appetite for risk, but also there's a lot of public cash out there looking for growth companies even in a higher interest rate environment and I can see Reddit taking that route even if it's not the perfect outcome. Ultimately, remaining private and trying to grow a sustainable, profitable business isn't going to be what they choose. I didn't even get into the porn situation, which may be why they decide to just go the tumblr route and try and cash out to a larger tech co though.
bpodgursky 4y ago
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.
- berelig 4y ago
  There are exceptions of course: https://techcrunch.com/2022/09/29/tripactions-ipo https://techcrunch.com/2022/09/29/tripactions-ipo
- supermatt 4y ago
  Didn't Visa IPO during the last recession? They seem to be doing pretty well...
  - lotsofpulp 4y ago
    Visa belongs to the class of businesses that are beyond healthy.
    - wewtyflakes 4y ago
      Not only that, but a business based on people using credit to buy consumer items, the need for which may increase when people's income decreases.
jzymbaluk 4y ago
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
noodle 4y ago
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
- throwaway1777 4y ago
  Exactly, where is the Stripe ipo?
mkl95 4y ago
Reddit were expected to go public in March. Russia shat the bed in February.
thrillgore 4y ago
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?
- tenebrisalietum 4y ago
  This comment feels like it would be new news in 2016 or even earlier when FPH got banned.
  - thrillgore 4y ago
    Is it though? Just a few days ago we had a troll incite redditors over a court case and once again, the only time Reddit responds is when they hit the news wires. It is hard to groom a community, but if you have this many public denigrations, there's problems in the company AND on the site.
yooloo 4y ago
Same as databricks?
richcollins 4y ago
They couldn’t coerce enough people to install the app.
gt565k 4y ago
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.
- gkoberger 4y ago
  You might say that... but Reddit is mainstream now. 99% of users are perfectly happy with the new Reddit (especially the iOS app). If anything, the new UI changes are in service of an IPO, not the reason it would fail.
  - DontchaKnowit 4y ago
    Not at all. Everyone that uses reddit fucking hates it. I used to use reddit constantly and they've killed all the useful subs, made the mobile ux nigh unusable, and turned the user based in to a leftwing circle jerk. So now I barely ever use it.
  - knaekhoved 4y ago
    - Enginerrrd 4y ago
      I totally agree with that, although the language is unnecessarily diminutive. It's just an extension of the eternal September problem. Companies often seem to forget that only like 1% of their users typically actually create the vast majority of content. Even fewer create the real quality content that is so attractive to begin with. It is the quality content, not general content that actually creates value to other users of the consumer variety. So... looking at metrics of what appeals to the 99% of consumer users and allowing that to drive design, to the point where it pisses off that 1% is a ticking time bomb. It's a seductive one though! You can have all manner of metrics that will look good, but are actually catastrophic in a delayed way: 'More engagement!' is easier to conclude from measurements and looks a lot better than 'Signal to noise ratio of quality content to generic content has decreased'. 'This new change makes it easier for non-technical people to sign up or post or consume content' seems great until you realize that's code for 'uh oh, it looks like the voting effects of newer users are suppressing quality content over less-nuanced content and signal to noise has decreased even further'. But those things also temporarily look good: 'more users!' 'more revenue!' And the social media implosion cycle begins anew as quality users leave in droves to a new platform.
nscalf 4y ago
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.
SilverBirch 4y ago
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.
- donedealomg 4y ago
- ransom1538 4y ago
  I would like to thank you for summary here. This makes it clear.
- webdoodle 4y ago
  That's not the source of the problem, just a symptom. What caused the financial problems for social media was the censorship, blatant propaganda and use of addiction based behavior modification to subjugate the population; AKA population control. Reddit might actually be one of the worst offenders, but because they aren't public, and have a smaller user base, they went unscrutinized. I highly recommend everyone watch the documovie the Social Dilemma. TLDR; Social media is military grade psychological weaponry aimed at the most vulnerable amongst us.
  - adrianN 4y ago
    > Social media is military grade psychological weaponry That would probably be good for the stock value, wouldn't it?
rvz 4y ago
The time to IPO was in 2019 as I said before. [0] [0] https://news.ycombinator.com/item?id=31062658 https://news.ycombinator.com/item?id=31062658
curiousllama 4y ago
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.
- mancerayder 4y ago
  Conde Nast... Yesterday I observed a user suspiciously plugging a pay therapy web site, but in a subtle way, in strange contexts on various subs. Looking at the user's other posts, there were THOUSANDS of messages for that and all sorts of other links to various websites, saying something personal about how it helped them. I went to flag it but there was absolutely no option within the flag reason. Commercial astroturfing is 100 percent okay on Reddit, in other words. Is that because of Conde Nast owning it? They must own a portfolio of ad and product stuff.
hesdeadjim 4y ago
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.
deleted 4y ago
[deleted]

55 points by boppo1 4y ago

It was all over the place rumor-wise, and now there's radio silence.

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.

pcbro141 4y ago

The stock market started declining.

jwithington 4y ago

the stock market https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/ipo-activity-fell-sharply-in-q3-as-stocks-dipped-recession-fears-climbed-72535953 https://www.spglobal.com/marketintelligence/en/news-insights...

aliqot 4y ago

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

wincy 4y ago
I’m sure it’s really helping their numbers having literally every single mobile page aggressively push you toward the mobile app with no way of disabling it.
- id 4y ago
  I'm unironically sure it's helping their engagement numbers. Someone with the app installed on their phone is going to engage much more frequently.
  - itsoktocry 4y ago
    >Someone with the app installed on their phone is going to engage much more frequently This sounds like something management would claim, but how so? What's inherently more appealing or engaging about the app, especially when you're practically forcing people to use it?
    - luplex 4y ago
      you can send push notifications, and it's one fewer tap to get on reddit. I think the push notifications are the main benefit.
    - gardenhedge 4y ago
      Bored people open apps before they browse to URLs.
  - bthater 4y ago
    At least anecdotally this push was the final push I needed to stop using reddit. I went from probably browsing for a few hours a day to maybe once or twice a month when a friend links me a post.
fullshark 4y ago
Nah they are cultivating a growth story, and the markets will eat it up in a few years when they are desperate for growth stocks again. Even though it'll be 20 years old by that time. Maybe they won't get a 15 billion valuation or whatever but the early investors/conde nast will make a healthy profit. https://twitter.com/paulg/status/1360263618508521480 https://twitter.com/paulg/status/1360263618508521480
- JumpCrisscross 4y ago
  > markets will eat it up in a few years when they are desperate for growth stocks again This requires low short-term and long-term rates for more than one fund cycle. That puts the IPO out, at a minimum, 5 to 7 years. It also puts it at odds with most near-term rates forecasts. If Reddit is waiting for peak valuations to go public, they'll be waiting for 10+ years or, more likely, be bought while running out of money, because waiting for multiples to change as a business strategy is a piss poor one.
  - fullshark 4y ago
    They don't need peak valuations, just a market that's not cowering in fear. It may even come within a year, I don't know their financials but they will find a window, maybe one where FB's social networks show clear weakness and they can sell a story as usupers of their market share. My guess is reddit is just trying to weather the storm to find that window and eventually it will come though maybe not satisfying their pre-recession fantasies.
    - JumpCrisscross 4y ago
      > don't need peak valuations, just a market that's not cowering in fear Present multiples do not convey this is a fearful market [1]. [1] https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe
      - fullshark 4y ago
        So the claim is interest rates will never get low enough to make unprofitable social networks that are growing enticing IPOs again? Or at least for years? If that's the case I guess private acquisition is another way out, but I think kicking the can down the road and waiting for sentiment to change makes sense. No doubt interest rates play a role in appetite for risk, but also there's a lot of public cash out there looking for growth companies even in a higher interest rate environment and I can see Reddit taking that route even if it's not the perfect outcome. Ultimately, remaining private and trying to grow a sustainable, profitable business isn't going to be what they choose. I didn't even get into the porn situation, which may be why they decide to just go the tumblr route and try and cash out to a larger tech co though.

bpodgursky 4y ago

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.

berelig 4y ago
There are exceptions of course: https://techcrunch.com/2022/09/29/tripactions-ipo https://techcrunch.com/2022/09/29/tripactions-ipo
supermatt 4y ago
Didn't Visa IPO during the last recession? They seem to be doing pretty well...
- lotsofpulp 4y ago
  Visa belongs to the class of businesses that are beyond healthy.
  - wewtyflakes 4y ago
    Not only that, but a business based on people using credit to buy consumer items, the need for which may increase when people's income decreases.

jzymbaluk 4y ago

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

noodle 4y ago

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

throwaway1777 4y ago
Exactly, where is the Stripe ipo?

mkl95 4y ago

Reddit were expected to go public in March. Russia shat the bed in February.

thrillgore 4y ago

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?

tenebrisalietum 4y ago
This comment feels like it would be new news in 2016 or even earlier when FPH got banned.
- thrillgore 4y ago
  Is it though? Just a few days ago we had a troll incite redditors over a court case and once again, the only time Reddit responds is when they hit the news wires. It is hard to groom a community, but if you have this many public denigrations, there's problems in the company AND on the site.

yooloo 4y ago

Same as databricks?

richcollins 4y ago

They couldn’t coerce enough people to install the app.

gt565k 4y ago

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.

gkoberger 4y ago
You might say that... but Reddit is mainstream now. 99% of users are perfectly happy with the new Reddit (especially the iOS app). If anything, the new UI changes are in service of an IPO, not the reason it would fail.
- DontchaKnowit 4y ago
  Not at all. Everyone that uses reddit fucking hates it. I used to use reddit constantly and they've killed all the useful subs, made the mobile ux nigh unusable, and turned the user based in to a leftwing circle jerk. So now I barely ever use it.
- knaekhoved 4y ago
  - Enginerrrd 4y ago
    I totally agree with that, although the language is unnecessarily diminutive. It's just an extension of the eternal September problem. Companies often seem to forget that only like 1% of their users typically actually create the vast majority of content. Even fewer create the real quality content that is so attractive to begin with. It is the quality content, not general content that actually creates value to other users of the consumer variety. So... looking at metrics of what appeals to the 99% of consumer users and allowing that to drive design, to the point where it pisses off that 1% is a ticking time bomb. It's a seductive one though! You can have all manner of metrics that will look good, but are actually catastrophic in a delayed way: 'More engagement!' is easier to conclude from measurements and looks a lot better than 'Signal to noise ratio of quality content to generic content has decreased'. 'This new change makes it easier for non-technical people to sign up or post or consume content' seems great until you realize that's code for 'uh oh, it looks like the voting effects of newer users are suppressing quality content over less-nuanced content and signal to noise has decreased even further'. But those things also temporarily look good: 'more users!' 'more revenue!' And the social media implosion cycle begins anew as quality users leave in droves to a new platform.

nscalf 4y ago

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.

SilverBirch 4y ago

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.

donedealomg 4y ago
ransom1538 4y ago
I would like to thank you for summary here. This makes it clear.
webdoodle 4y ago
That's not the source of the problem, just a symptom. What caused the financial problems for social media was the censorship, blatant propaganda and use of addiction based behavior modification to subjugate the population; AKA population control. Reddit might actually be one of the worst offenders, but because they aren't public, and have a smaller user base, they went unscrutinized. I highly recommend everyone watch the documovie the Social Dilemma. TLDR; Social media is military grade psychological weaponry aimed at the most vulnerable amongst us.
- adrianN 4y ago
  > Social media is military grade psychological weaponry That would probably be good for the stock value, wouldn't it?

rvz 4y ago

The time to IPO was in 2019 as I said before. [0] [0] https://news.ycombinator.com/item?id=31062658 https://news.ycombinator.com/item?id=31062658

curiousllama 4y ago

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.

mancerayder 4y ago
Conde Nast... Yesterday I observed a user suspiciously plugging a pay therapy web site, but in a subtle way, in strange contexts on various subs. Looking at the user's other posts, there were THOUSANDS of messages for that and all sorts of other links to various websites, saying something personal about how it helped them. I went to flag it but there was absolutely no option within the flag reason. Commercial astroturfing is 100 percent okay on Reddit, in other words. Is that because of Conde Nast owning it? They must own a portfolio of ad and product stuff.

hesdeadjim 4y ago

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.

deleted 4y ago

[deleted]