A Form S-1 is the registration statement a company files when it wants to sell shares to the public for the first time. It is the document behind an IPO.
A Form S-1 is the registration statement a company files when it wants to sell shares to the public for the first time. It is the document behind an IPO.
It matters because of what comes before it. A private company publishes nothing. Then the S-1 lands and years of audited figures appear at once, along with a business description, risk factors and an explanation of what the money is for.
An S-1 gets amended as the process runs. The final version, with the price filled in, is filed as a prospectus under a form number that begins 424. That one tells you what actually happened.
Reddit filed its S-1 on February 22 2024.
Four numbers and you have the company. Revenue grew about 21%. The loss roughly halved, from $158.6 million to $90.8 million. It was still a loss.
Now use the operating metric. $804.0 million of revenue across 73.1 million daily active uniques is about $11.00 per daily user for the year. That figure is nowhere in the filing. You made it from two numbers that are.
Then the pricing. The final prospectus, dated March 20 2024, priced the offering at $34.00 per share for 22,000,000 shares. That split matters. 15,276,527 of those shares were sold by Reddit itself and 6,723,473 were sold by existing shareholders.
Only the first group raises money for the company. 15,276,527 times $34.00 is about $519.4 million of gross proceeds to Reddit. The other 6,723,473 shares moved about $228.6 million to the people who already owned them.
The trap is reading the headline offering size as money the company received.
Twenty-two million shares at $34.00 is about $748 million. Reddit's share of it was about $519.4 million gross, before underwriting fees. The rest went to selling shareholders. Shares sold by the company are primary. Shares sold by existing holders are secondary. Every prospectus states the split and almost every news story rounds it away.
The second trap is treating an S-1's growth rates as a promise. A company chooses when to go public, and it usually chooses a moment when the numbers look their best. Two years of figures in an S-1 is the minimum. It is not a trend.
A friend asks whether she should be impressed that Reddit raised nearly three quarters of a billion dollars.
What was the offering?
22,000,000 shares at $34.00. About $748 million in total.
How much of it was the company selling?
15,276,527 shares. About $519.4 million gross.
Where did the rest go?
6,723,473 shares were sold by existing shareholders. About $228.6 million went to them and not to the company.
She asks whether the company was profitable.
No. A net loss of $90.8 million for 2023, improved from $158.6 million in 2022, on revenue of $804.0 million. Growing and still losing money.
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