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notes. So Reddit has recently adjusted CEO Steve Huffman's compensation structure in anticipation of its forthcoming initial public offering or its IPO. Now this is a recalibration of its market value expectations. But previously Huffman's compensation included incentives tied to the company achieving a $25 billion market valuation. Upon going public, these incentives had been revised, reflecting a more conservative outlook on the company's IPO
performance. Now in a detailed review of companies documents, it was discovered that in December Reddit retracted specific executive awards contingent upon the company reaching A lofty market capitalization post IPO. This move shows a strategic pivot in the company's approach to execute compensation and valuation aspirations.
And despite the adjustment in valuation based incentives, Huffman maintains eligibility for restricted stock units or Rs US contingent on the company sustaining a $5 billion market valuation over a 10 day period. A recent updates to the company's filings suggest that this revised valuation target aligns with Reddit's current market expectations with a potential RSU value estimated at approximately $21 million.
Now this recalibration of financial expectations is a significant tempering of ambition for Reddit's IPO. Posited as a notable event in the tech industry's market listings for the year, the company initially filed for an IPO confidentially in 2021, but decided to postpone. Influenced by an environment of increasing interest rates in a downturn in tech stock valuations, the company Reddit is poised to list shares on the New York Stock Exchange
imminently. With pricing markedly low to its last private valuation of $10 billion, the strategy shows that the company's pragmatic adjustments to current market conditions in investor sentiment are 100% real. Now there's executive compensation amendments going on here. Now there's concerns about that too. And there's because there's late changes to Huffman's incentives, these adjustments might not adequately motivate the CEO towards substantial post IPO
stock value growth. It's a potential issue for any investor's perspective going into this IPO. Now, while Huffman's compensation has been adjusted, some aspects of executive incentives remain tied to ambitious valuation targets. Notably, Huffman and Chief operating Officer Jennifer Wong retain eligibility for stock options and performance awards linked to the company, reaching $25 billion valuation. This is a mix of conservative and aspirational targets within the executive compensation
structure. Now Huffman, who's a Co founder of Reddit known by the username Spez, has been pivotal in the company's growth and strategic direction since its operation and his return in 2015. And under his leadership, Reddit has expanded this user base and enhanced its advertising revenue streams, navigating through periods of organizational
challenges. And the delay in Reddit's IPO has afforded the company a little bit of additional time to diversify its revenue sources beyond traditional advertising, venturing into E com and also data licensing. And these initiatives had contributed to a revenue increase of over 20% last year totaling $804 million. Although the company has not yet achieved profitability with a reporting net loss of almost $91 million in 2023. Now, this data licensing is a key aspect of Reddit's future.
With large language models and AI, they can use all the data from the users, all the posts, all the comments, all the up votes. As data for AP is for AI subsets, and as Reddit prepares for its IPO and a competitive and scrutinized market, its ability to attract investor interest remains a little bit uncertain right now, especially given its lack of profitability and the challenging landscape
for digital advertising revenue. Company's performance in this regard will serve as a litmus test for the market's receptiveness to tech AP OS right now. In anticipation of its stock market debut, Reddit has outlined strategic plans to bolster its fledgling advertising sector and diversify revenue streams, including
content licensing. The company aims to leverage these initiatives to improve financial health and engage potential investors by offering IPO shares to its user base, a move that could generate considerable buzz and engagement. Despite these growth efforts, potential investors face the prospect of buying into a company that has not. Yet reported. A profitable year And amidst fierce competition for advertising revenues from larger, more established
companies. This context raises questions about Reddit's valuation and its appeal to investors seeking substantial and sustainable growth and profitability. This IPO, with a targeted valuation significantly lower than previous estimates, is a cautious approach in a market environment that has growth Increasingly wary of high valuations for unprofitable companies. This pricing decision underscores the company's adjustment to market realities and also investor sentiments.
Keep it low, people will invest, and the company's decision to reserve a portion of its IPO shares for its user community introduces a unique element to its public offering, potentially increasing stock volatility due to unpredictable trading behaviors of retail investors. And this approach, while fostering community engagement, introduces additional dynamics that can impact the stock market's performance. Now, I was invited to be part of those IPO shares.
I haven't reserved my shares quite yet, but I may be investing in this. And mind you, this is not investment advice from me or from the show or from the company, so just want to let you know that I got in. Hopefully you get it too. Now, Reddit's competitive positioning in the social media and digital advertising marketplaces will be scrutinized within the next week.
The company's ability to carve out a substantial niche amid formidable competitors will be critical to its long term success and attractiveness to new investors after the IPO. The market conditions right now, characterized by recent listings that are lacklustre in performance and an uncertain interest rate landscape, pose additional challenges for Reddit's IPO right now. The company's market debut will be closely watched all the way through 2024 and 2025.
We've seen it happen before. Tech stocks have been valued so high and within six months completely plummet off the face of the earth. So Reddit's a cool place. I enjoy it. I think it's fun. I don't know if you like it. Maybe it's a a good investment for you. Maybe you can help support the company. But as they navigate the public offerings, the company's performance will offer valuable insights into viability of new tech IPOs in the current
economic and market environment. The outcome of this IPO could influence the strategies of other tech companies that are similar to Reddit, considering public listings shaping the trajectory of the IPO market in the near term. Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I'd greatly appreciate it.
It helps out the show tremendously and you'll never miss an episode. And each. Episode is about 10 minutes or less to get you caught up quickly. And please, if you want to support the show even more, go to patreon.com slash. Stage 0. And please take care of yourselves and each other and I'll see you tomorrow.