by The American billionaires behind the Condé Nast media empire will receive a $1.4bn (£1.1bn) windfall from Wall Street’s Reddit listing, 18 years after they paid just $10m for the social media company.
Advance Publications, owned by the wealthy Newhouse family, one of America’s wealthiest dynasties, has a 30.1pc stake in Reddit – which is targeting a valuation of up to $6.4bn when it goes public next week.
On Monday Reddit set an initial price range of $31 to $34 per share, which would value Advance at between $1.3bn and $1.4bn.
Condé Nast, the Advance Publishing empire behind Vogue, Vanity Fair and The New Yorker, acquired Reddit for $10m in 2006, a year after it was founded.
Advance was launched in 1922 by publishing magnate Sam Newhouse, who later passed control of the business to his heirs Donald and Samuel Jr. before his death in 1979.
Samuel Jr., who died in 2017, was credited with developing the family’s iconic titles, while 94-year-old Donald remains president of Advance.
Donald and Samuel Jr have amassed a collection of newspaper, magazine and telecommunications assets worthy of the Succession, which remains family-owned and maintains a low profile.
Gradually control was given to the brothers’ sons, Steven, Michael and Samuel III, as well as a younger cousin, Jonathan. The family is listed as the 13th richest in America with a total wealth of $24.1bn, according to Forbes.
As well as Reddit and Condé Nast, the group owns long-distance race group Ironman and is the largest shareholder in Warner Bros Discover and telecommunications giant Chart.
Until 1998, the group owned the book publisher Random House.
Samuel Jr, known as Si, commissioned Donald Trump’s The Art Of The Deal in the 1980s.
Advance spun off Reddit as a separate company in 2011 but is still poised to make a huge profit on its investment.
Reddit began an investor roadshow on Monday and is likely to adjust its expected share price as it responds to investor feedback.
The flotation will be one of the biggest of the year so far and is being watched closely as a test of investor appetite for new listings.
Other major investors include Chinese internet giant Tencent, which has an 11pc stake, and Sam Altman, chief executive of ChatGPT developer OpenAI.
Mr Altman, who led the 2014 funding round, owns 8.7pc of Reddit. This is worth up to $413m based on Monday’s pricing range.
Reddit could raise up to $748m in a New York stock exchange listing, making it the biggest social media float since Pinterest’s 2019 stock exchange debut.
However, even at the optimistic end of its valuation range, it will be far less than the $10bn the company raised funds for in 2021, the peak of a tech investment boom.
Reddit has around 73m daily users who join communities called “subreddits”, dedicated to their favorite sports teams, local city or hobby.
It is known for features such as “ask me anything” events where celebrities answer user questions, and its upvotes and downvotes system, which determines which comments appear at the top of the discussion.
In 2021, his Wall Street Bets community was at the center of the “stock meme” trading trend that sent the share prices of companies like GameStop skyrocketing and led to calls for an investment revolution.
The number of users increased by 27 PCs in the past year, and revenue increased by 21 PCs to $804m, almost all of that from advertising.
Reddit was also recently added to changes to Google’s search algorithm that prioritized authentic content over spammy web pages.
However, the company faces a series of questions and concerns that could deter potential investors. Eighteen years into its existence, the company has never turned an annual profit and lost $90.8m last year.
This is despite the fact that the company outsources a significant amount of work to volunteer “moderators”, who police various subreddits and set their rules.
Reddit is also known for its unruly user base and comments, which have repeatedly landed the company in trouble.
His management was involved in knots for years over a subreddit dedicated to Donald Trump that became conspiracy theorists.
In the early days, Reddit was also known for containing overtly non-consensual images and fostering racist communities.
The company has since cleaned up the worst elements but they can still be hostage to user whims.
Last year, thousands of subreddits were inaccessible to the public in revolt against plans to start charging for access to large amounts of Reddit data.
The artificial intelligence revolution has created a new opportunity.
It has reached a $60m-a-year deal with Google, under which the search giant will use valuable Reddit data to train its AI systems.
But to be successful, it will have to overcome the skepticism of its users.
Comments about Reddit’s stock market listing on the Wall Street Bets subreddit were overwhelmingly negative, flooded with posts asking for advice on how to bet against the company.
