Reddit, the user friendly social network filed to go public, do an Initial Public Offering, IPO.
At its last private funding round, Reddit was valued at 10 billion USD. With circa 800 million USD of revenue for 2023 and net loss of 156 million USD for 2022, Reddit's intrinsic worth is 27 billion USD, according to Wolfteam Ltd.'s projections and estimates.
Meta Platforms Inc, the owner of Facebook, WhatsApp, Messenger and Instragram social networks has a market capitalization of 1.28 billion USD. There is definitely room for another dominant social network, outside Facebook and partly LinkedIn.
Viable candidates are Snap Inc, Snapchat's owner, Pinterest and Reddit. All these social networks can take at least a partial piece of the hundreds of billions of USD a year advertisements revenues going to social networking globally. The problem is that from Snap Inc, Snapchat's owner, Pinterest and Reddit only Pinterest is relatively consistently profit making, while Snap Inc and Reddit are regularly reporting losses and negative net profit margins ranging from - 20 % to - 40 % even per quarter.
Snapchat's strategy is seemingly aimed at the young auditorium. Snap Inc, Snapchat's owner is trying to make its young user demographic engage more with the platform and hopes as its audience starts maturing advertisements revenue will flow in.
Reddit is also trying to drive more user engagement, riding on the success the Meme Wall Street mania surrounding GameStop 2 years ago. Reddit has to work more on its user interface, though. Reddit recently signed a deal for Alphabet, the owner of Google to be able to crawl, scrape its user produced comments to educate its artificial intelligence, AI learning algorithms. The deal Reddit and Alphabet, the owner of Google inked is for 60 million USD. This is an entirely new revenue stream for Reddit to monetize. Data is the new oil. Algorithms need data to produces better insights and Reddit's user produced comments is a treasure trove of information. And people are still infinitely better at thinking than machines. So Reddit's user produced comments undoubtedly entail hard earned insights and information, which can help artificial intelligence, AI learning algorithms learn and ultimately improve our lives.
All in all, Reddit is grossly undervalued.
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