The archive · Consumer Apps · Financial decision · 2021–2023
Reddit's ~$15B IPO plan hit a 41% Fidelity markdown by mid-2023
Reddit raised at $10B in a 2021 Fidelity-led Series F and touched $15B in secondary trades, then its lead investor marked the stake down 41% as IPO doubts grew.
What the business is
Reddit is one of the web's largest community discussion platforms — the "popular social media platform" that by mid-2021 drew 50 million daily visitors across 100,000 active subreddits and had just posted its first $100M+ quarter of advertising revenue.
How it started
In 2021 Reddit was already on an IPO track: it had raised $250M earlier in the year, bringing total funding near $800M, and its role in the r/WallStreetBets-driven GameStop and AMC rollercoasters had doubled its valuation to $6B. Co-founder Steve Huffman told The New York Times the company had not planned to raise another round so quickly, but could not turn down what Fidelity was offering, and said the funding would factor into eventual IPO plans: "We are still planning on going public, but we don't have a firm timeline yet." The company had also hired its first-ever CFO, Drew Vollero, who had helped take Snap public.
What happened
In August 2021 Fidelity led a Series F in which Reddit confirmed $410M raised, with plans to reach up to $700M, at a $10B valuation, earmarking the money for community, advertising and headcount. By late 2021 Reddit shares were changing hands at as much as $15B in secondary markets. Then the market turned: through 2022 and into 2023 Fidelity repeatedly cut its estimate of the stake's worth, part of a broader rout in which it also marked down Stripe and valued Twitter at about $15B. By April 28, 2023, Fidelity Blue Chip Growth Fund's Reddit stake stood at $16.6M — down 41.1% from the $28.2M it spent in August 2021.
How it ended up
As of the June 2023 report Reddit was still private and operating, and declined to comment; TechCrunch said the markdown raised uncertainty about whether Reddit would maintain its reported intent to go public at a valuation around $15B. Reddit had raised over $1B to date, with Sequoia Capital and Andreessen Horowitz among its backers.
Background
Reddit is one of the web's largest community discussion platforms, and in 2021 its business finally caught up with its fame: it posted its first $100M+ quarter of advertising revenue (up 192% year over year), drew 50 million daily visitors across 100,000 active subreddits, and rode the r/WallStreetBets GameStop and AMC frenzy into the mainstream. Earlier that year it had raised $250M, bringing total funding near $800M, and its valuation had doubled to $6B.
In August 2021 Fidelity led a Series F in which Reddit confirmed $410M raised with plans to reach up to $700M, at a $10B valuation. Co-founder Steve Huffman said the company had not planned to raise again so quickly but could not refuse Fidelity's terms, and that the money would factor into eventual IPO plans. By late 2021 Reddit shares changed hands at as much as $15B in secondary markets, anchoring the company's reported ambition to go public around that level.
The market then stopped cooperating. Through 2022 and into 2023 Fidelity repeatedly marked down its stake — part of a broader reset that hit Stripe and Twitter as rates rose — and by April 28, 2023 its $28.2M Reddit position was valued at $16.6M, down 41.1% cumulatively since the August 2021 purchase. Reddit had raised more than $1B to date, with Sequoia Capital and Andreessen Horowitz among its backers.
TechCrunch's June 2023 report treated the markdown as a test of Reddit's reported intent to go public at around $15B, noting that valuations of many large startups had held steady despite the broader slowdown even as Fidelity's filings kept cutting this one. Reddit declined to comment, and remained private as of the report.
What has to be true
- The round was opportunistic: Huffman said Reddit had not meant to raise again so soon but could not refuse Fidelity's terms, so $10B was a seller's-market number, not an operating milestone.
- Secondary trading at up to $15B in late 2021 turned a fundraising mark into an expectation, anchoring Reddit's reported IPO ambition to a peak the market had already stopped supporting.
- The write-down was not Reddit-specific: Fidelity marked down Stripe and Twitter too as rates rose, so the 41% cut was a boom valuation meeting the 2022-23 reset, not a verdict on Reddit.
- The consequence was a credibility gap, not a cash crisis: with over $1B raised Reddit kept operating, but its ~$15B IPO intent no longer matched its lead investor's own filings.
What can be applied
Frothy private marks are not money: a $10B round and $15B secondary trades can be marked down 41% before an IPO, so raise when terms are good but never bank the mark.
Aftermath
As of 2023-06-01 Reddit remained private and operating, declining to comment on the markdown; it had raised more than $1B to date with Sequoia Capital and Andreessen Horowitz among its backers. TechCrunch read the 41.1% cut as raising uncertainty about Reddit's reported intent to go public at around $15B, part of a broader reset of growth-stage valuations after the 2021 peak. The material records no development beyond that date.
Sources
- Fidelity has cut Reddit valuation by 41% since 2021 investment
- Reddit is raising up to $700M in Series F funding
- Fidelity has cut Reddit valuation by 41% since 2021 investment
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