- Reddit discloses investments in Bitcoin and Ethereum in its IPO filing, signaling a strategic move to utilize excess cash for crypto investments.
- Reddit’s exploration of blockchain technology includes purchases of Ether and Polygon’s MATIC for virtual goods transactions.
On Thursday, February 22, the social media community platform Reddit submitted its S1 filing to the U.S. Securities and Exchange Commission (SEC), as the company progresses towards launching its own Initial Public Offering (IPO).
The news holds greater significance because Reddit announced in its IPO prospectus that the company made strategic investments in the top two digital assets – Bitcoin and Ethereum. The disclosure of Reddit’s investment in Bitcoin and Ethereum underscores the company’s strategic approach to utilizing excess cash for investment endeavors. In its filing submitted to the SEC, Reddit noted:
“We invested some of our excess cash reserves in Bitcoin and Ether and also acquired Ether and Matic as a form of payment for sales of certain virtual goods, which we may continue to do in the future”.
Focusing on these leading cryptocurrencies aligns Reddit with well-established assets, enhancing its presence in the digital currency sphere and solidifying its position within the crypto market. The Reddit IPO prospectus did not specify the quantity of Bitcoins and Ethereum held in its treasury or the duration of its investment. However, it underscored the company’s commitment to preserving crypto investments and backing established entities as part of its strategic approach.
“The net carrying value of our cryptocurrencies, which consisted primarily of Bitcoin and Ether, as well as all related cryptocurrency activity, was immaterial for the periods presented,”
Reddit wrote in its S-1.
Reddit’s Blockchain Integration Plans
Reddit mentioned that it has been “exploring blockchain technology” by purchasing Ether and Polygon’s MATIC as a means of payment for certain virtual goods. The company clarified that the Ether and MATIC received were not significant throughout 2022 and 2023 but left open the possibility of using these cryptocurrencies for future transactions.
Additionally, Reddit noted that its product and engineering team holds cryptocurrencies for specific purposes, although it did not disclose the types or amounts. Despite recognizing the significant potential of blockchain-related technologies, Reddit expressed uncertainty about the continuity of business and consumer adoption in this realm.
“While we believe cryptocurrencies and blockchain technology have significant potential, the popularity and prevalence of cryptocurrencies is a relatively recent trend, and whether cryptocurrencies and blockchain technology will continue to be adopted by consumers and businesses in the long term is uncertain.”
Looking ahead, Reddit is gearing up to debut on the New York Stock Exchange under the ticker symbol “RDDT.” The S-1 registration, typically used by companies preparing for an initial public offering, disclosed that Reddit incurred net losses of $90.8 million in 2023, despite a 20.6% year-on-year revenue increase to $804 million.
After being valued at $10 billion during its funding round in 2021, Reddit’s estimated valuation may now be halved, as reported by Bloomberg on Jan. 28.
In October, Reddit discontinued its blockchain-based rewards service, “Community Points,” which rewarded users for positive engagement in specific subreddits. The decision to shut down the service was primarily due to scalability concerns.
