#638 – 📰 r/RedditGoingPublic – The Average Joe
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    #638 – 📰 r/RedditGoingPublic

    victorlei

    February 23, 2024

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    Good morning. As hybrid and remote work become more common, Casual Friday has turned into Casual Monday-Friday — and a new survey out of the UK reveals that denim is the top choice for casual attire:

    • Of those surveyed, 80% say they wear denim to parties, 45% wear it to the office, and 13% even wear it to job interviews (…no word if they got the job).

    • Incredibly, 10% of respondents say they’ve worn denim to a wedding, and 9% have worn denim to a funeral.

    Now we’re curious: Have you noticed a denim revival stateside? Or are the British particularly obsessed with denim?


    REDDIT IPO

    Corporate Reddit Is Here, But Can It Convince Investors That It’s More Relevant Than Ever?

    Avid social media users can agree on one thing: Reddit is in a league of its own. While other platforms come and go, Reddit remains a staple on our screens despite angering its community time and again. CGP Grey once said, “Reddit makes you feel more like a citizen of the internet than a citizen of your own country.” But what happens when Reddit goes corporate?

    Reddit or not, here it comes: Yesterday, Reddit filed for its long-awaited IPO, kicking off the process of bringing the social media giant to the New York Stock Exchange (NYSE) under the ticker $RDDT. Last year, the company’s sales jumped 21% to $804M, active users grew by 27%, and net losses fell 43% to $91M.

    • With over 73M daily active users and 100K active communities, Reddit is expected to go public in early March, which could fetch a valuation surpassing $5B.

    • That’s significantly lower than its $10B valuation in 2021 — and a far cry from Meta (NASDAQ:META), whose market cap would be 248x larger than Reddit’s.

    Reddit rolled into 2024 with $1.2B+ in cash, more than a fifth of its proposed valuation — thanks in part to last summer’s decision to lay off 5% of its workforce, which helped narrow its losses. Despite its widespread popularity, Reddit has struggled to build a concrete business model but found new life during the pandemic as online communities blossomed (shout-out to r/wallstreetbets).

    Reddit Gone Corporate

    While Reddit stands apart from its competitors in many ways, its revenue streams aren’t so different. Despite positioning itself as a community-driven alternative to social giants, it has remained an afterthought for advertisers — below Meta, TikTok, and even Twitter/X. To catch up, the company is exploring options to boost its revenue:

    • This week, Reddit started selling user data to help Google (NASDAQ:GOOG) train its AI, a decision that Founder and CEO Steve Huffman defended as “best for Reddit’s survival.”

    • Last year, it also raised prices on its API, which developers use to access the platform for building related tools — leading to a temporary blackout of over 7K subreddits.

    Throw a bone: In a concession to its users, the company offered 75K of its most engaged users access to shares at its IPO price. But sometimes, being an early bird doesn’t pay off. Users of another retail crowd favorite, Robinhood (NASDAQ:HOOD), were given similar access during its 2021 IPO. Since then, $HOOD has plummeted nearly 60%. And while the market landscape is different today, buying into companies right when they go public often spells trouble for investors.


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    Marketing is an art, not a science — or, at least, it was. AI is solving an age-old advertising pain point by pinpointing exactly what works and what doesn't in marketing campaigns.

    Dubbed the “essential AI” for brandsRAD AI analyzes extensive historical content patterns across different marketing channels.

    They’re disrupting the $633B marketing technology and data analytics industry — solving one of the biggest problems for marketers.

    Their success is evident by the numbers… [Download RAD AI’s investor presentation]

    • $27M raised from 6,000+ investors, including VCs, execs at Google, Amazon and Meta. Backed by Adobe Fund for Design.

    • ~3X revenue growth in 2023 — while landing major clients including Hasbro, Skechers, Sweetgreen and more.


    LARGECAP RECAP

    💾 Can Microsoft help Intel anchor the return of advanced chips to the US?

    A decade ago, Intel (NASDAQ:INTC) was the world’s most advanced chipmaker — but today, it’s playing catch up with Asian competition like TSMC and Samsung. To regain its edge, Intel has poured billions into building state-of-the-art semiconductor plants in the US. Now, it’s finally scoring billion-dollar clients.

    • Microsoft (NASDAQ:MSFT) announced it would use Intel’s semiconductor plants to manufacture its own AI chip as part of a multi-billion dollar deal.

    • The chip will use Intel’s cutting-edge 1.8nm fabrication technology, making it one of the densest high-performance chip architectures ever made.

    Intel’s in the arena: Intel has been on a turnaround tour after years of sluggish sales and demand in its computing sector — but its new foundry business could turn all that around. Investors have sent the stock up more than 77% from its Oct. 2022 lows, hoping the third-largest chip producer could soon reclaim the top spot.

    💻 BuzzFeed sells Complex — but its path to profitability remains complicated

    BuzzFeed (NASDAQ:BZFD) is selling Complex Networks to e-commerce platform NTWRK for $108.6M, just three years after acquiring the youth-focused brand for $294M. However, BuzzFeed will retain Complex’s “First We Feast” brand, known for the hit interview show “Hot Ones,” adding it to its roster alongside  HuffPost and Tasty.

    • This sale injects much-needed cash into BuzzFeed, which has been grappling with financial troubles since its IPO in Dec. 2021, helping to pay down over $233M in debts.

    • BuzzFeed plans to streamline its operations by reducing its workforce by 16% and focusing more on content created by independent creators and artificial intelligence.

    Clickbait and switch: BuzzFeed went public at a valuation of more than $1.5B, but today it’s worth less than $55M — making it one of a handful of new media companies (think: VICE Media, Forbes, Group Nine Media) to test public markets… and lose. Although the deal will help it make payroll, BuzzFeed expects a decline in forecasted Q4 revenue, now projecting $73M-78M instead of the previously estimated $99M-110M.


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    Markets & Economy

    Japan’s Nikkei stock market average hits 34-year record high: Put simply, the index’s 225 companies have been raking in cash, posting $266B in profit in their current fiscal year — though inflation is likely playing a role in those hot earnings. [Read]

    Latest Fed minutes show resistance to premature rate cuts: Looks like we’re staying higher for even longer, as the Fed tries to avoid >2% inflation becoming “entrenched.” While a US rate cut is expected in June, traders in Europe see no cuts in sight. [Read]

    US prison population rises for first time in nearly a decade: Combined state and federal prison numbers climbed 2.1% between 2021 and 2022. Though it’s the first uptick in a while, the population remains 360K lower than in 2012. [Read]

    Business & Wealth

    AT&T (NYSE:T) customers face massive outages: You might have had trouble reaching some friends yesterday morning, especially if they live in Houston, Chicago, Dallas, or LA. Outages peaked at around 71K customers by 8 a.m. — the cause remains unknown. [Read]

    Google (NASDAQ:GOOG) to produce Pixel phones in India by next quarter: The tech giant is diversifying production beyond China as US-China tensions continue. They join Apple (NASDAQ:AAPL) and Samsung, who recently moved smartphone production to India for similar reasons. [Read]

    Corporate jet users may get a call from the IRS: Some private jet owners face scrutiny for writing off personal travel as business expenses. The IRS has already collected $482M from crackdowns — part of efforts to recover $700B in annual uncollected tax revenue, according to the Biden admin. [Read]

    *Thanks to our sponsors for keeping the newsletter free.


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    From check-in to check-out, Jurny is bringing the $4.1T hospitality industry into the future.

    Their AI software helps Airbnb and hotel property managers automate everything from reservations and pricing — to customer service and smart thermostats.

    This helps property managers maximize revenue and save time and money, and customers are loving it.

    • In 2023, they grew their customer base by over 5x — and processed $35M+ in bookings.

    • They’ve raised over $5.5M from industry leading investment funds and from over 1,000 individual investors.

    And here’s your chance to get in: Invest here before March 7 and earn up to 20% bonus shares on top of your initial investment.


    CHART


    DIGIT OF THE DAY

    The Latest “No Recession” Signal: Cardboard Box Sales Rebound After Falling 10% in 2023

    Always think outside the box, but don’t forget to look inside it for signs of the economy's direction. The “cardboard box indicator” is an unconventional measure that indicates how the economy is doing based on the volume of shipped goods, which has helped predict potential recessions in the past. After all, more boxes shipped = more sales = more robust economy.

    • Charles Schwab’s Jeffrey Kleintop notes that “during the last three or four recessions over the last 30 years, demand for cardboard boxes fell by 10% to 15%”(MW).

    • However, he believes there is a turnaround now as corrugated fiberboard demand rebounds after falling over 10% last year.

    Cardboard-nomics: Recent earnings reports offer insight into economic strength. This week, Walmart’s (NYSE:WMT) CFO mentioned feeling “better about the health of the economy” — though concerns about consumer spending in certain categories linger. Placer.ai’s R.J. Hottovy expects spending spikes around events like Valentine’s Day and Mother’s Day — saying, “We underestimated that people still were willing to spend around these events.”


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