Reddit recently went public after years of being private. Huffman says they want to make Reddit “faster, easier to use, easier to moderate and govern.”
What Does It Mean when a Company Goes Public?
Imagine a lemonade stand run by your friend, Lucy. Right now, Lucy owns the whole stand by herself. Going public is like Lucy deciding to let other people buy a piece of her stand by selling them shares or pieces of the business.
When Lucy’s lemonade stand “goes public,” it means she’s selling these shares on the stock market. Anyone can buy a share, which means they own a tiny piece of the stand. In return, Lucy gets money to grow her stand, like buying more cups, lemons, or even opening more stands!
So, going public is like sharing ownership of the business with lots of people who want to invest in it.
Sometimes, private companies become public. They will do this in order to raise capital so they can possibly later expand. This action could emphasize capital base, simplify acquisitions, vary ownership, and create more prestige. However, there can also be pressure on growth, inflation, restrictions, forced disclosure, and lack of control for owners.
How is Reddit Changing?
Once Reddit is public, users are going to become owners. This is due to the company’s desire for the website to grow bigger than most platforms’ traditional standards. There will also be a stronger collaboration between Google and Reddit.
What Happened to Other Companies that went Public?
Snapchat went public in 2017. The company was founded on September 16, 2011. The app sold 200,000,000 shares for $17 each but investors wanted even more stocks than how many were being sold. Snapchat had the option to sell more shares but did not do that.
Facebook also didn’t meet expectations. However, it definitely augmented its value, becoming $81 billion when pricing for its IPO. Facebook/Meta was founded way before Snapchat, 2004, and went public on May 18, 2012. The share price was $38 but lowered to less than $18 and then went up again recently. Mark Zuckerberg actually owned many Class A shares and Class B shares in 2022.
Reflection
Several companies go public, yet, Reddit is the first to do it in a while. Reddit may or may not make a lot of money from this action. Either way, investing will be a huge decision if you plan on doing it.
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