By Karen E. Roman
In an interview with Schwab Network’s Nicole Petallides, IPO Edge Editor-in-Chief John Jannarone discussed how Reddit will be the largest IPO to date in 2024, boasting impressive performance metrics including gross margins near 90%, over $800 million in revenue in 2023 and more-than 20% annual growth.
At a roughly $6.4 billion valuation, Reddit would command a multiple of 8 times trailing sales. Mr. Jannarone contrasted Reddit’s valuation with prices two years ago, when companies were raising money privately at much higher levels (Reddit had a round at $10 billion).
Looking to how the market will receive the deal, he pointed out that the company has over 18 years of existence and a community of 73 million daily users. He also mentioned how Reddit was profitable in the fourth quarter of 2023 on an Ebitda basis and sees a long-term Ebitda margin of 40%.
Mr. Jannarone pointed out how Reddit has faced fewer issues with advertisers than the likes of Meta Platforms, Inc. (Nasdaq: META) or X (previous Twitter) and it should serve as a good foundation for the business. What’s more, Reddit has big revenue potential using data to support machine learning (ML) and AI models which need to be trained. Reddit focuses on text interactions and does not rely on videos, making it cheaper to run and easy for ML and AI programs to process the collected data.
For a window into more up and coming companies, readers are welcome to watch our fireside chats from the New York Stock Exchange, were IPO Edge recently sat down with CEOs and C-suite leaders of companies like Stavvy, Controlled Thermal Resources, Virtru, ThoughSpot, Semperis, Diligent and others. Full interviews are available on IPO-Edge.com and investors can also subscribe to a newsletter for updates on the homepage.
To watch the full Schwab interview with Ms. Petallides and Mr. Jannarone see below or visit IPO-Edge.com.
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