Reddit IPO vs WallStreetBets: Quick Facts March 21th & My Price Target

If you're looking to buy, sell (if you got those community shares) or short Reddit at it's IPO, this video is for you.

First, mark the date:

Thursday, March 21, it will IPO on the New York Stock Exchange under the ticker symbol RDDT, typically IPO's launch around 10 AM EST

Here's what we'll discuss:

1. Reddit's own WallStreetBets doesn't like the IPO and what's to short it, but why?

15m users voted to short it
lack of profitability and competitive issues
volunteer mods early buy program, big employee stock sales, AI ambitions..
- listed as a risk factor, on S-1, as there is no holding period
8% of the float is going to "redditers"
- not locked up, so they can sell right away
- similar to Robinhood allowing the same to it's retail buyers

2. Finding from the IPO filing Form = SEC Form S-1

Is the initial registration form for new securities required by the SEC for public companies that are based in the U.S
ARPU 3.42, very low compared to comps
- $3.42 vs $40+ FB, $24 TWTR and $22 IG and $14 Linkedin
  - NOTES: 98% media ads rev
Wants to raise $748 mill in IPO through sale of 22m shares
Currently, Reddit IPO sees 4-5x oversubscription
- eyes $6.5 billion valuation
73m daily active user, online communities called sub-Reddits
20% rev growth 2024 (this is very strong) typically closer to 5% YoY
Main Rev 98% through advertising and now also AI training data sets
Additional Info:
- Reddit cashes in on AI gold rush with $203M in LLM

3. 2023 Big IPO's and how they are doing

ARM, KYVO, BIRK, CART
- 2 below 2 above IPO price
- All dipped below IPO price; for at least several weeks
Slow IPO market currently, but it is heating up

4. What the all-in Podcast thinks about the IPO

Business flatlined, 5% growth YoY, last 2 quarters saw a bigger boom, worried valuation is at this "random" boom level. And they don't know why. If that stops could be bad, Reddit needs a good answer for that.
- 2023 rev $804m up 21% YoY
- 2023 -$91 min profit, So NET it's losing money.. bad for this macro env..
  - Free cashflows neg
DAUg, 76m up 27% Y0Y
Weekly active unique (“WAUq”) metric and daily active unique (“DAUq”)
ARPUissue
5-7x multiple puts them at this $6.5b rev