Reddit, birthplace of the meme stock, is going public. Here's what to expect

When Reddit goes public later this month, it will be the first major tech company — let alone social media platform — to do so in years.

The popular discussion forum site is aiming for a target valuation of up to $6.4 billion US when it launches its initial public offering (IPO) on the New York Stock Exchange, giving the public an opportunity to invest in the company's stock for the first time.

Pinterest was the most recent of the early-generation social media companies to go public back in 2019.

Reddit is currently owned by a handful of executives, including: CEO Steve Huffman and COO Jennifer Wong; several companies, such as the media firm Advance Publications; and other individual investors, like OpenAI CEO Sam Altman, who served on the company's board for a time and owns a considerable stake of its shares.

The platform, which launched in 2005 as part of the first wave of social media, has since become one of the world's most visited websites — beating even Amazon.com's daily traffic.

After years of circling around an IPO, Reddit first tried to go public in December 2021, filing an S-1 form with the U.S. Securities Exchange Commission. At the time, the company had a valuation of $10 billion US.

But the listing was pushed back and it eventually fizzled out in early 2022 due to several compounding factors: the U.S. economy was in rough shape, Russia had launched its invasion of Ukraine and the Fed decided to raise its key interest rate.

Plus, "internally, they weren't quite ready," said Paresh Dave, a senior writer at tech outlet Wired. "They had to do all these audits, they had to make sure that they could do their accounting on time. And having some of those things in place just hadn't been a priority for so long that it took a while to get all that sloppiness out of the picture."

That's because the company had been dealing with issues related to content moderation, making it difficult for Reddit to invest in its ad business, he added.

The site relies on users who volunteer as moderators called "mods" to make sure other Redditors follow guidelines — a uniquely non-obtrusive approach to online content moderation that also gives mods the power to destabilize the site.

That's precisely what happened last summer, when many of the site's mods restricted or locked their popular subreddits in protest of Reddit's plan to charge businesses for access to its application programming interface (API).

The API, which lets users download and exchange data, is used by moderators to help them navigate the site. But it's also a goldmine for companies who want to cash in on Reddit's treasure trove of data (more on that later).

Some Reddit users are worried that the IPO will change the site's user experience, and that the company hasn't proven it can properly monetize the website.

"Reddit is just a very useful resource to so many people, and people want to see it preserved, but there's still the question over whether going public will change that and change that nature and change that usefulness of Reddit because they'll be focused on other priorities potentially, like growing their share price," Dave said.