Reddit Increases User Base and Revenue Year Over Year in First Quarter After IPO
The terms web 2.0, social media and social networking originated in the mid-90s. But the company most commonly associated with kicking off the age of large-scale publication of user-generated content on the web is Meta or, as it was called in 2004 when it was officially incorporated, Facebook. Mark Zuckerberg's company is still arguably the biggest Western social media platform, reportedly boasting 2.1 billion daily active users as of December 2023. At the time of its IPO in May 2012, it had already been established as a social media powerhouse, surpassing competitors like Friendster or Myspace with apparent ease. This is also reflected in its recorded revenues from its first-ever quarterly report released in July 2012.
Our chart based on official company statements shows that Meta generated $1.2 billion in revenues between March and June 2012, up 32 percent year over year, which can be interpreted as evidence of Facebook already being a mature company with a clear-cut, advertising-focused business model. This model helped counter the relatively large sum of $1.9 billion in costs and expenses, mainly due to share-based compensation to be expected when taking a private company public.
The resulting net loss can also be seen in more recent IPOs like Snap Inc. posting a deficit of $2.2 billion in the month after going public in 2017 or Pinterest accumulating a net loss of $1.1 billion after its IPO in April 2019. Conversely, revenues at each of the portrayed companies rose by solid double-digit figures, with Snap Inc. being the outlier in almost quadrupling its revenue year over year.
The most recent prominent social networking site going public is Reddit, which had its IPO on March 21. In its first quarterly report, the company declared revenues of $243 million and a net loss of $575 million, figures similar to Twitter when it went public in November 2013. Another important metric for social media sites, active users, also grew significantly. These figures have to be taken with a grain of salt, though, since comparability is almost impossible due to every company employing different standards and measures when counting said users. Examples include using either daily, weekly or monthly active users with no clear reasons given for either decision or in some cases not clearly defining how many users who have an account visit the site versus users who use their services without logging in first.